INDEX EDITORIAL POLICY MESSAGE FROM THE PRESIDENT CORPORATE PROFILE ISUZU S CSR ACTIVITIES RESPECT FOR EMPLOYEES...

Transcription

1 CSR Report 2017

2 INDEX EDITORIAL POLICY MESSAGE FROM THE PRESIDENT CORPORATE PROFILE ISUZU S CSR ACTIVITIES Full Model Change of Heavy-Duty Giga Trucks for the First Time in 21 Years Embodying the Ideal State of Trucks for the 21st Century Improving Environmental Performance Pursuing Safety SOCIAL CONTRIBUTIONS Management Approaches Disaster Area Support Initiatives Initiatives for Next Generation Development Employee Participation Activities Global Activities ENVIRONMENT Management Approaches Activity Reports Environmental Communication FY 2016 Activity Results (Isuzu Group) FY 2016 Activity Results (Isuzu) QUALITY Management Approaches Initiatives for higher product quality Initiatives for higher service quality Initiatives for higher operation quality RESPECT FOR EMPLOYEES Management Approaches Industrial health and safety Utilization of Diverse Human Resources Personnel Development Improving Employee Satisfaction HARMONY WITH LOCAL COMMUNITIES Management Approaches Initiatives in Japan Initiatives in Foreign Countries INFORMATION DISCLOSURE COMPLIANCE Management Approaches Activity Reports RISK MANAGEMENT CORPORATE GOVERNANCE SUPPLY CHAIN MANAGEMENT Management Approaches Activity Reports A THIRD-PARTY OPINION GRI GUIDELINES INDEX

3 Editorial Policy Isuzu CSR Reports are published to provide an understanding of the important issues for both our stakeholders and Isuzu, with regard to the CSR activities carried out by the Isuzu Group. The reports are intended to reinforce communication with the Group s stakeholders and thus to further develop CSR activities that can meet the expectations of stakeholders and society. In this year s report, we have reviewed information disclosure in response to the GRI Guidelines 4th Edition (G4), the international guidelines for sustainability reports published in May We are also continuing our measures for materiality identification which were started in FY2016, and are proceeding with steps to specify themes that should be addressed with high priority by the Isuzu Group. The progress of these initiatives will be announced in CSR Reports scheduled for future publication. Scope of Report Centering on Isuzu Motors Limited, this report describes activities undertaken by Isuzu Group companies in Japan and abroad. * Isuzu in this report refers to Isuzu Motors Limited alone. * For details, see our Securities Report. Publication Information Published August 2017 (Previous report: Published September 2016; Next report: Due to be published August 2018) Referenced Guidelines GRI Sustainability Reporting Guidelines 4 th Edition * GRI Guidelines (Sustainability Reporting Guidelines): Unified international guidelines formulated by GRI (Global Reporting Initiative), an international NPO, in an attempt to improve the quality, reliability and comparability of the content of CSR reports. Significant Changes within the Reporting Period Isuzu Motors Limited has undergone the following changes in scale, structure and ownership during period of the report. About Isuzu s initiatives for its East African businesses Acquisition of shares in General Motors East Africa (GMEA) Securities Report (Japanese only) Inquiries about the Report Period Covered This report includes activities carried out between April 1, 2016 and March 31, 2017 in principle. However, significant matters in other periods are also partly included in this report. Please visit the Isuzu website for our FY2016 business summary and financial information. CSR & Eco Planning Group, Corporate Communications Dept., Isuzu Motors Limited 2

4 3 Message from the President I would like to express our appreciation for your continued extraordinary support and understanding. The Sustainable Development Goals (SDGs) enacted by the United Nations are shifting from a focus on issues for individual national governments to issues for the global economy, and so response measures are being required even from corporations to resolve related social challenges. Corporate evaluations have also been changing accordingly, showing trends toward evaluating ESG (Environment, Social, Governance) investments in addition to financial information. As the environment surrounding corporations undergoes these types of large-scale changes, the roles which should be played by Isuzu to achieve a sustainable society continue to expand. In specific terms, Isuzu will contribute to the realization of a low-carbon society through its initiatives to address the issue of climate changes. In addition to the development of diesel engines with excellent fuel economy which comply with the strict environmental standards of individual countries, these measures also include undertaking challenges to apply various types of leading-edge technology such as vehicles powered by natural gas as an alternative fuel, hybrid vehicles, and electric vehicles. Similarly, as methods of adapting to climate changes, we are focusing on actions such as enhancing our operational support system. While advancing our environmental activities, we have rebuilt our environmental management system according to the basis of ISO14001, and in December of last year we completed integrated support for ISO14001: 2015 across the entire Isuzu company. However, there have recently been occurrences of unjust practices involving diesel engine development, undermining the credibility of overseas automobile manufacturers. Isuzu has implemented in-house investigations to ensure that it is not involved with any such unjust acts. We will continue to make dedicated efforts to build strict check systems and release accurate information in order to preserve the trust we have earned from our customers. In terms of safety, which is an essential obligation for automobile manufacturers in conjunction with environmental issues, we will perform rigorous tests based on standards while also taking action to reduce accidents by continuing to introduce the latest technology. Furthermore, we will create many opportunities for employment by globally deploying development and production work, and development bases, working toward the cultivation of our next generation by establishing maintenance schools and maintenance courses to communicate the technical skill and know-how we have gathered, and taking action to correct any disparities that exist in countries and regions we expand into. In Japan, we opened our Isuzu Plaza in April of this year. This is a facility where visitors can become familiar with the culture of Isuzu through the themes of Supporting transportation - Isuzu s work, Isuzu s automobile production, and Isuzu s history, while being available for use by local residents as a community space. From here on, we will steadily enhance our programs and continue to promote our CSR activities. By promoting company activities based on our Corporate Vision, Isuzu will act to fulfill its social responsibilities as a growing corporation, and will offer Isuzu unique solutions based on trust to make contributions toward solving various social issues. We hope that you will continue to support us even more in the future. President and Representative Director Masanori Katayama

5 Corporate Profile Name: Head Office: Corporate Profile ISUZU MOTORS LIMITED Minami-Oi, Shinagawa-ku, Tokyo Japan Tel Isuzu Corporate Vision Isuzu will always mean the best A leader in transportation, commercial vehicles and diesel engines, supporting our customers and respecting the environment President and Representative Director: Masanori Katayama Establishment: April 1937 Capital: 40.6 billion yen(march 2017) Employees: Consolidated 33,631 Non-Consolidated 8,111 (March 2017) Isuzu Corporate Mission Trust, Action, Excellence A global team delivering inspired products and services committed to exceeding expectations Major Products: Heavy- medium- and light-duty trucks,buses, passenger vehicle engines, industrial-use diesel engines. Sales: Consolidated: 1,953,186 million Non-Consolidated: 1,065,886 million (April 2016-March 2017) Operating profit 146,444 million (year ending March 2017) Operating profit 152,022 million (year ending March 2017) Consolidated current net income that belongs to the shareholders of the parent company: 93,858 million (in March 2017) No. of consolidated subsidiaries 90 (as of March 2017) 4

6 Corporate Profile Business deployment by region (Isuzu Group companies) The Isuzu Group has established development, manufacturing and sales bases not only in Japan but also worldwide, sharing our ideas on Monozukuri, and promoting the homogenization of our services and support. At present, Isuzu products are sold in a hundred and several tens of countries and regions. The Elf, for example, the leading light-duty truck brand in Japan, is recognized as the global standard among light-duty trucks having captured the top share in numerous countries worldwide. Our D-MAX pick-up truck, currently based in Thailand and exported to more than 100 countries, is further evidence that confidence in Isuzu is spreading worldwide. Consolidated sales composition by region (April 2016-March 2017) Others billion 24% Asia billion 27% 19,532 billion Japan billion 40% North America billion 9% Consolidated sales composition by business (April 2016-March 2017) Europe 9 companies China 10 companies North America 6 companies Others 23% billion CV billion Middle East and Africa 4 companies Asia 21 companies Japan 25 companies Oceania 1company Central and South America 4 companies PT & Compo billion 5% LCV billion 22% 19,532 billion 50% as of March 2017 CV: Heavy/Medium-duty trucks & buses LCV: Pick-up trucks PT & Compo.: Vehicle engines & Industrial engines 5

7 Isuzu s CSR Activities Basic Ideas For sustainable development together with society, we at Isuzu emphasize the importance of fulfilling our social responsibility and achieving our corporate vision while building up trusting relationships with our stakeholders, and we call this Isuzu s CSR activities. The activities are intended to realize our corporate vision through the achievements of each Isuzu employee, understanding the Policies of Isuzu s CSR Activities and applying them to its business field. Isuzu leverages its strength in obtaining the trust of society and contributing to sustainable development with society through its CSR activities as well as fulfilling its social responsibility. Basic Policy for CSR activities Winning trust from our customers Promoting fair and sound activity Ensuring fair disclosure of corporate information We aim to win trust from our customers by providing valuable products and services to society, and thus contribute to the creation of a prosperous society. Isuzu business is based on transactions under fair and free competition. Isuzu also keeps a sound and proper relationship with the government and politicians, and as a corporate citizen, acts strongly against anti-social forces and organizations. We broadly communicate with our stakeholders in society not limited to shareholders, and ensure timely, appropriate and fair disclosure of our corporate information. Isuzu Corporate Vision page 4 Respect for Employees Making a contribution to environment conservation Contributing to society Ensuring harmony with international and regional communities We create a safe and comfortable work environment respecting each employee s personality and character so that everyone can fully demonstrate their capabilities. We actively work on environmental conservation not only through our business activities but also as a corporate citizen residing on earth by getting involved in social and regional environmental conservation activities. Isuzu proactively undertakes social contribution activities as a good corporate citizen. We respect the cultures and customs of the nations and regions where we operate, and contribute to their development through our business activities. 6

8 Isuzu s CSR Activities Isuzu Group Stakeholders The Isuzu Group conducts business and develops CSR activities with its main stakeholders (those who have a vested interest) in the table below. The table describes examples of communication between Isuzu and our stakeholders to whom we are responsible. Main stakeholders Responsibility to stakeholders Main dialog opportunities & information disclosure Customer Stable supply of products and services Supply of safe, reliable products and services Everyday sales activities CSR News, CSR Report (Isuzu website) Supply of worthwhile products and services Supply of environmentally friendly products and services Suitable supply of product information Appropriate response and support for customers Improved customer satisfaction Proper management of customer information Shareholder Appropriate return of profits back to shareholders CSR News, CSR Report (Isuzu website) Timely and suitable disclosure of corporate information Maintenance and increase of corporate value Business partners Fair and equitable selection and trading Daily purchasing activities CSR News, CSR Report (Isuzu website) Employees Fair and equitable assessment and treatment CSR News, CSR Report (Isuzu website) Assignment/utilization and training of suitable personnel Respect for human rights Respect for diversity Promotion of work-life balance Consideration for industrial health and safety Government Legal compliance CSR News, CSR Report (Isuzu website) Payment of taxes Cooperation with measures Regional society Protection and respect for local culture and customs Contribution to local development Cooperation with local activities Workplace accident/disaster prevention Participation in local events Invitation to workplace events CSR News, CSR Report (Isuzu website) 7

9 Isuzu s CSR Activities Initiatives toward Materiality Identification GRI (Global Reporting Initiative), which formulates and publishes international guidelines on corporate sustainability reports, released its GRI Guidelines 4th Edition in May 2013 calling for information disclosure focused on key issues (materiality). Isuzu is pressing ahead with the identification of key issues (materiality) in order to comply with these guidelines by the following steps. In 2015, we completed actions up to Step 3 (Setting a materiality hypotheses) as indicated below, and proceeded with materiality identification investigations for However, considerable time was required to verify the viewpoints of our company and society, and so the schedule has been revised. We are now proceeding with investigations, under the schedule of implementing Step 6 (Identification of materiality) by Implemented in 2015 Step1 Finding and arranging key issue candidates ❶ Find key issue candidates from the following Various guidelines (GRI, ISO 26000, SDGs, SASB, etc.) Daily communication with stakeholders ❷ Integrate, organize and screen the above, and set key issue candidates that should be considered Step2 Forming an evaluation hypothesis from the perspective of society and our company ❶ Formulate an evaluation axis from a social perspective and our company s perspective ❷ Set the following evaluation hypothesis based on the evaluation axis in ❶ Evaluation hypothesis from our company s perspective, based on the external environment, characteristics, strat- Scheduled for implementation by 2017 Step4 Verification of materiality hypothesis (our company s perspective) Establishing an evaluation from our company s perspective by the verification of Isuzu Group employees Step5 Verification of materiality hypothesis (social perspective) Establishing a social perspective by the verification of stakeholders Step6 Identification of materiality Identify the direction in which Isuzu s CSR activities are proceeding by materiality identification egy, CSR activity status, etc. related to Isuzu s business Evaluation hypothesis from a social perspective, based on social trends, industry trends, etc. Step3 Setting a materiality hypothesis ❶ Combine the two evaluation hypotheses from Step 2 into one materiality matrix hypothesis ❷ Integrate the key issues to form Isuzu s materiality hypothesis 8

10 In 2015, Isuzu carried out a full model change of its Giga heavy-duty trucks for the first time in 21 years. With the goal of achieving the ideal state of trucks in an age where both improved environmental performance and safe operation are demanded, these heavy-duty trucks make full use of the latest technology and are the final result of the unified views toward the future held throughout our company. Environmental Performance with Consideration for the Future of the Earth With the enactment of the Paris Agreement, a new international framework for global warming prevention measures, we have entered an age in which even corporations are being required to carry out more effective actions to address the intensifying issue of global warming. While Japan s emission regulations are among the top class in the world, recently the emission regulation standard values even of developing nations are approaching the levels of advanced countries. Notably, the emission regulations of our neighboring country China, which is faced with serious issues regarding PM2.5 (fine particulate matter), are being reinforced at a rapid pace. In addition to such movements toward strengthening international environmental regulations, domestic and overseas customers alike have expectations for environmental performance improvements related to the three points of low fuel consumption, emission countermeasures, and noise prevention measures. Low fuel consumption is a particularly frequent request from among these, and so the new Giga model has been developed with the pursuit of low fuel consumption treated as a major point of improvement, in order to meet such expectations of society as well as our customers. Achieving Low Fuel Consumption through Extensive Engine Improvements and the Power of IT The new Giga model has achieved low fuel consumption through improvements in engine performance as well as innovations in cab design. Specifically, while attaining efficient supercharging through optimization of its turbocharger, it has enhanced its cooling functions as a result of enlargement of its inter-cooler and radiator, and improvement of its air management system. It has successfully realized high fuel economy and efficiency by utilizing high-pressure fuel injection. The cab design has also been fundamentally improved to reduce the air resistance of the vehicle body, and enhancements in aerodynamic performance have improved its air resistance values. Furthermore, in addition to such hardware-based technological factors, its remote system for monitoring information on vehicle operation using IT (information technology) can assist in achieving low fuel consumption from a software-based perspective. The new Giga model is equipped as standard with the remote monitoring system MIMAMORI, which allows customers to easily check the operating data and conditions of a vehicle via the Internet. Data related to operation with low fuel consumption, such as average vehicle speed, engine speed, and gear shifting frequency, are recorded by a computer, and a fuel economy report can be viewed in the office of a customer s vehicle manager. There are even cases among customers where drivers compete to have the best scores on fuel economy reports, and where they are used to raise the motivation of drivers to improve their driving skill. MIMAMORI also incorporates functions to detect problems with a vehicle, and has arranged a system by which appropriate maintenance can be performed based on data before vehicle failure occurs. This allows us to provide dependable support for stable vehicle performance. Isuzu believes that the stable operation of vehicles has an indirect connection to environmental preservation, and is actively focusing on contributing to environmental measures through information systems like MIMAMORI. As a result of aiming for improved environmental performance from both hardware-based and software-based perspectives, the new Giga model has attained significant improvements in fuel economy compared to previous models. Undertaking Challenges toward Developing Alternative Energy Vehicles Environment regulations will continue to be more and more stringent on a global scale. Isuzu Motors Limited will remain committed to the further improvement of fuel consumption of the diesel engine as the core drive power through higher combustion efficiency. Furthermore, Isuzu has achieved a full lineup of CNG (compressed natural gas) vehicle models with the addition of a CNG vehicle to its heavy-duty truck lineup. In the future, we will make further efforts to improve environmental performance by creating new products in the alternative energy field such as an EV and a dual fuel engine using both natural gas and diesel fuel. Image of air currents Reduction in air resistance by causing air currents to flow alongside the vehicle body 9

11 The development of the new Giga model began with discussions across divisions including the Manufacturing Division, Engineering Division, and Sales Division on the ideal state of trucks. After more than one year since its launch, we are relieved that it has been able to accumulate actual results which meet or exceed the targets set for low fuel consumption, the point which was requested most often by our customers. In order to respond to social issues such as environmental problems and a shortage of drivers, which are likely to become even more serious from here on, we intend to focus all of our efforts into developing heavy-duty vehicles which can be operated easily by anyone, with no differences in fuel economy. ISUZU MOTORS LIMITED Chief Engineer, H/D Product Planning & Engineering Dept. Pursuing Safety with a Balance between Legal Compliance and Customer Needs Together with its improvements in environmental performance, one point highly emphasized in the development of the new Giga model was the further pursuit of safety. As support is demanded for new safety standards in Japan and Europe, and for domestic safety laws triggered by highway bus accidents and other cases, Isuzu has pursued vehicle safety with the goal of balancing legal compliance with the safety requirements of its customers. The new Giga model was developed with the concept of pursuing total safety, putting Isuzu s views on safety into physical form with the objective of ensuring safety from all perspectives. Reducing Collision Damage with the First Dual Detection System in Domestic Trucks The new Giga model is compatible with Pre-crash Braking (PCB) systems, which are required to be installed in all heavy-duty vehicles, as well as ISUZU Electronic Stability Control (IESC). Its largest improvements are the addition of collision avoidance support functions to the PCB system, and the adoption of dual detection which combines cameras with conventional millimeter wave radar. This is the first time for such systems to be installed in domestic heavy-duty trucks, and they have greatly reduced errors in object detection and false warnings. In addition, a Lane Departure Warning System (LDWS) employs a camera to recognize the lane a vehicle is driving in, and if the vehicle should move onto a lane dividing line, warns the driver with a display on an LCD monitor and an alarm which produces a deliberately unpleasant sound. These specifications, not found with other manufacturers, could only be successfully realized by Isuzu. Furthermore, these vehicles are equipped with Electronic Vehicle Stability Control (EVSC) systems required by law, and semi-tractor air-suspension vehicles are equipped as standard with Rollover Warning (ROW) systems which can detect the risk of rollover at a stage even before the operating range of IESC. This has made it possible to expand the possibility for warnings to be provided, allowing vehicles to recover even if they have reached a tilting condition with a high risk of rollover. Providing Safety Equipment of Great Value to Customers The characteristics of passenger vehicles and commercial vehicles differ greatly depending on their size and weight. Most significantly, the new Giga model of heavy-duty trucks is adjusted ( tuned ) to appropriately replace safety systems installed in them, to account for the characteristics of heavy-duty vehicles. This procedure is based on Isuzu s fundamental concept on safety: Providing safety equipment of great value to customers. Customer safety requirements are highly diverse, and consideration must be taken to balance them with costs. We will continue to make daily efforts to develop safety equipment which will make our customers think, I m so glad it was there. Pursuing Safety while Looking Toward an Age of Automatic Driving A shortage of commercial vehicle drivers resulting from Japan s declining birth rate and aging population has become a prominent issue in recent times. To respond to such social issues, Isuzu has been involved in operational verification experiments performed on new types of buses which employ automatic driving technology since FY2017. Starting from FY2018, we are also scheduled to participate in national verification experiments aimed at achieving convoy driving with unmanned operation of following vehicles, together with parties including other domestic commercial vehicle manufacturers. Rather than limiting our efforts to improvements in the safety only of our own vehicles, we will pursue even greater safety through approaches which look toward the realization of automatic driving. Dual detection with millimeter wave radar + cameras Moving beyond a single obstacle detection system using only millimeter wave radar, a dual detection system combining millimeter wave radar and cameras has been implemented in domestic heavy-duty trucks for the first time, successfully achieving high detection performance. Safe operation Active safety Pre-crash safety Passive safety 10

12 Initiative Policy Isuzu positions the social contribution initiatives in responses to meet Underpinned with the policy, we conduct the initiatives using Isuzu s social expectations and needs. Every single Isuzu employee needs to show unique business assets (human resource, technologies, know-how, equip- his/her interest in social issues extensively and needs to take actions for ment, etc.) and self-motivated activities performed by the individual Social Contributions those needs as an Isuzu member. We consider that it is important to make Isuzu a trusting partner to the society. Disaster Area Support Initiatives employees. Employee Participation Activities 11 Although Six years have passed since the Great East Japan Earthquake, Isuzu will go on supporting reconstruction and answering the needs of the stricken areas, such as by holding workshops for children there to learn about the pleasure and importance of Monozukuri. We will also Isuzu is implementing education through employee participation activities, so that each and every employee becomes interested in a wide range of social issues and is aware of how to meet those needs. 13 Disaster Area Support Initiatives continue to provide support for areas affected by other disasters in Japan and around the world, aiming for Isuzu unique solutions. 14 Initiatives for Next Generation Development 16 Employee Participation Activities 17 Global Activities Initiatives for Next Generation Development Global Activities We hold activities in various locations which include work experience We are aiming to carry out activities which focus on the Sustainable activities for children and visiting lectures on environmental topics, for Development Goals (SDGs), to support social needs for next-generation the purpose of developing our next generation. development not only within Japan but also overseas. 11

13 Social Contributions Disaster Area Support Initiatives 14 Initiatives for Next Generation Development 16 Employee Participation Activities 17 Global Activities Initiative Policies and Results for FY2016 In addition to disaster support activities in FY2016 which included donations to disaster areas (Kumamoto, Ecuador, Italy), we took steps to deepen our social contribution activities such as by encouraging greater numbers of our employees to participate in them. Points for Initiatives We intend to enhance and firmly establish our social contribution activities by distributing detailed information to employees and requesting their involvement. We will also introduce Isuzu s initiatives extensively through active participation in events outside of our company. System We hold Social Contribution Promotion Meetings on a regular basis, where Social Contribution Promotion Committee Members selected from each division in our company discuss new initiatives and measures to improve our activities. Social Contribution Promotion Meeting System Chairperson General Manager, Corporate Communications Department Mechanisms to Encourage Employee Participation While encouraging employee participation by using posters and company-wide s, we also communicate the results of our activities on a broad scale both internally and externally with our in-house newsletter as well as Isuzu s website and community site. Support for External Initiatives and Coordination with Industry Groups We are promoting activities which invite employee participation while engaging in coordination and cooperation with various groups. NPO ETIC. NGO OISCA Specified nonprofit corporation TABLE FOR TWO International NPO Second Harvest Japan Future Initiatives We are promoting initiatives to fully apply the business assets (human resources, technology, know-how, equipment, etc.) as well as the strengths of Isuzu, with consideration for the Sustainable Development Goals (SDGs) adopted by the 2015 United Nations General Assembly. Secretariat Corporate Communications Department CSR Environmental Promotion Group Quality Assurance Division Promotion Committee Members Administration Division Promotion Committee Members Sales Division Promotion Committee Members Purchasing Division Promotion Committee Members Engineering Division Promotion Committee Members Manufacturing Division Promotion Committee Members 12

14 Activities to Prevent 311 from being Forgotten school students, former students and other local residents in the town of Minamisanriku town in Motoyoshi-gun, Miyagi Prefecture. This time it became a very content-rich class as it also provided a space for interaction with local people, including some who were junior or senior high school students at the time of the 2011 earthquake and who talked about their experiences just after the disaster and their hopes for the future, which made the process of reconstruction feel more familiar. Six years after the Great East Japan Earthquake, as our thoughts turn to the disaster areas that still need various forms of support and to March 11, which reconfirmed for us the importance of relationships and forming bonds, we engaged in efforts to keep us from forgetting our awareness and memories of the earthquake disaster. Going forward, Isuzu will continue to support disaster areas by doing the things that only Isuzu can do. Social Contributions 11 Management Approaches * Sokoage: An NPO with offices in Kesennuma and Minamisanriku that carries out activities such as awareness cultivation and learning support in collaboration with local high schools. 13 * March 11 is Tsunagaru (Connect) Day: Launched by the NPO ETIC., which serves as the secretariat for Michinoku Revival Partners, this is a project aimed at sustaining support for the areas affected by the earthquake disaster. * Michinoku Revival Partners: A consortium formed by corporations from different industries who utilize their respective businesses to collaborate and provide support for disaster areas. On November 19, in partnership with the NPO Frontier Minamisoma* 2, we also held a casting class at Minamisoma City in Fukushima Prefecture. Unfortunately it was raining on the day, but a total of 26 children and local residents took part in the morning and afternoon sessions. 14 Initiatives for Next Generation Development * NPO Frontier Minamisoma: Launched with the aim of doing what is possible now to rebuild disaster-stricken homes and conducting urban development for regional revitalization, this NPO s activities are connected to a wide network of communities. It has particularly strong ties with mothers and their children and the administrative authorities, and most of its projects are composed of activities concerned with people s daily lives and support for children. 16 Employee Participation Activities 17 Global Activities "March 11 is Tsunagaru Day" poster displayed at all Isuzu offices A creative Tohoku support menu, which includes ingredients from the disaster area, at all Isuzu office cafeterias has connected around 750 employees with the Tohoku region Isuzu Monozukuri Hands-on Workshops for Children in the Disaster Areas Children participating in the event despite the rain, together with their guardians and members of the community We held a casting class during Sokoage Drinks, an event conducted by this group for interaction between high school students and adults from the community. Through the opportunities for interaction offered by the casting class, children were able to find out how familiar objects are NPO Sokoage produced, and could form an image of what it is Atsuhide Noda like to work at a company. The scene of adults becoming totally engaged in grinding and polishing work also left a powerful impression. We could truly feel how important it is to take a step back from everyday busy life and spend some time completely absorbed in something different. Smiles all round in a commemorative photo with their shiny Elga-chan and Elf-kun characters 13 On October 22, in partnership with the NPO Sokoage*, isuzu held a Monozukuri Hands-on Workshop Casting Class attended by 13 local high

15 Social Contributions 11 Management Approaches 13 Disaster Area Support 14 Initiatives 16 Employee Participation Activities 17 Global Activities DeuSEL Project special lesson held at elementary school On October 17, a visiting lecture on the DeuSEL Project was held for three fifth-grade classes at Sakado Elementary School in Kawasaki, Kanagawa Prefecture. This was the second such lesson following the one given last November, and once again Isuzu brought the DeuSEL bus in cooperation with project partner Euglena Co., Ltd. The lesson revolved around why this project was launched, what the concerns for the future of the world are, and a description on the microalgae euglena and its wonderful properties, and the children took notes as they listened intently. Shouts of joy resounded throughout the DeuSEL bus when they had a chance to ride around in it later. Their homeroom teachers also offered words of praise, saying that as a class on environmental education it was beneficial and very easy to understand. Scene of visiting lecture at Sakado Elementary School in Kawasaki On February 23, a visiting lecture on the DeuSEL Project was also held for 98 pupils in three fifth-grade classes at Higashi-kashiwagaya Elementary School in Ebina, Kanagawa Prefecture. Kawasaki Center for Climate Change Actions Cooperating with DeuSEL panel exhibition at CC Kawasaki Exchange Corner The Kawasaki Center for Climate Change Actions (Kawasaki, Kanagawa Prefecture) is a base established in Kawasaki for promoting global warming prevention activities within the city. Its activities include: Holding consultations and seminars related to topics such as household energy saving and electricity saving, to promote global warming prevention Collecting and distributing information to serve as reference material on environmental initiatives, for citizens and business operators Promoting activities to spread public awareness of topics such as global warming prevention, energy saving, and electricity saving, and advancing environmental study and education Panel exhibitions and other events with themes related to global warming prevention are held at the CC Kawasaki Exchange Corner in this Center every month, with biofuel and urban mines selected as the themes for February. On this occasion, DeuSEL was introduced as an initiative related to biofuel. Isuzu provided its support to this display with an informative panel and a papercraft model of a DeuSEL bus. DeuSEL panel on display at the CC Kawasaki Exchange Corner Scene of visiting lecture at Higashi-kashiwagaya Elementary School in Ebina 14

16 DeuSEL Bus Used at Event just before G7 Transport Ministers Meeting Social Contributions 11 Management Approaches 13 Disaster Area Support 14 Initiatives 16 Employee Participation Activities The Eco Car Festa in Karuizawa was held at Karuizawa in Kitasaku, Nagano Prefecture on September 4, just ahead of the G7 Transport Ministers Meeting being held at the same town from September This event was held under sponsorship by the G7 Transport Ministers Meeting Nagano Promotion Council, which promotes the acceptance of Transport Ministers Meetings, together with the 2016 Summit Promotion Karuizawa Town Meeting, and the Association for the Promotion of Electric Vehicles. Welcoming roughly 2,800 visitors, it featured displays and offered test drives of fuel cell vehicles operated by hydrogen and small-sized electric vehicles at the venue. Euglena Co., Ltd. and Isuzu operated a DeuSEL bus to serve as a shuttle bus traveling between the venue and JR Karuizawa Station. In the bus, Isuzu representatives presented explanations on DeuSEL and euglena, receiving many comments expressing the desire for more widespread use of such buses. 17 Global Activities DeuSEL bus operating as a shuttle between the venue and Karuizawa Station 15

17 Social Contributions 11 Management Approaches 13 Disaster Area Support Initiatives 14 Initiatives for Next 16 Generation Development 17 Global Activities Participated in Children s Forest Project Support through Second-hand Books! We started the Children s Forest Project Support through Second-hand Books! * 1 in the Fujisawa and Tochigi regions, in continuation from the area of our Omori Headquarters* 2. Isuzu is collecting used books from employees at all of its offices, with their proceeds contributed as donations to support the Children s Forest Project. *1 This Project, sponsored by the NGO OISCA, supports activities for children to plant and nurture trees at their school and in their region through proceeds from donations of used books and other materials. The program aims to encourage children to value and love nature. Number of countries implementing the Children s Forest Project: 35 as of March 2015 (Nearly all of them, including Japan, China, Thailand, and Indonesia, are in regions where Isuzu deploys its businesses.) Children s Forest Project (NGO OISCA) *2 Introduced in the area around the Omori Headquarters in November A collection box placed in the area around the Omori Headquarters from November 2015 The refreshing breeze blowing now and again from Mt. Fuji encouraged both children and adults, allowing them to fully enjoy the planting activities. Implemented the Isuzu Itadakimasu ( Let s Eat! ) with 4,000 People! Campaign To coincide with World Food Day on October 16, established by the UN to bring attention to the problem of food shortages around the world, Isuzu carried out its own Isuzu Itadakimasu (Let s Eat!) with 4,000 People! Campaign from October 11 to November 30 aimed at helping children in Africa and Asia who are suffering from poverty and hunger. A total of 4,836 employees across all Isuzu offices participated in the campaign. A special campaign menu including a Tohoku Variety! 2-Type Rice Ball Set was prepared using local specialties of the six prefectures in the Tohoku region, thereby also supporting disaster-stricken areas in the region. Also provided were daily special Bicho Mini-Rice Balls made with high-fiber ingredients effective for maintaining a healthy intestinal environment. Participation in Mt. Fuji Forestation Project Results of initiative On May 28, a total of 78 people from Isuzu Headquarters, Fujisawa area and Tochigi area participated in the 9th Mt. Fuji Forestation Project. Item Target Result No. of users 4,000 4,836 This project aims to restore the forests of Mt. Fuji so that they have a diversity of plant species and a robust ecosystem, and Isuzu has been involved since On the day, the participants worked for about 1.5 hours planting 240 trees at an elevation of around 1,600 m. Working on the slopes was tough, but the faces of the participants at the end of their work showed not only moderate fatigue but also a deep sense of achievement having engaged 16 with the natural environment of Mt. Fuji. Tohoku Variety! 2-Type Rice Ball Set made with specialties from Tohoku s six prefectures Various Bicho Mini- Rice Balls including edamame, corn, etc.

18 Social Contributions 11 Management Approaches 13 Disaster Area Support Initiatives 14 Initiatives for Next Generation Development 16 Employee Participation Activities Educational Aid Program at Training School for Auto Mechanics (Philippines) Isuzu Heart & Smile Project Held the graduation ceremony for the 11th phase and the entrance ceremony for the 15th phase (February 2017) In February 2017, 18 people graduated from the 11th phase of this project, and 18 new participants entered for the 15th phase. 200 people have graduated from the project, and are active as mechanics at automobile distributors and repair shops both within the country and overseas, and as trainers at the after-sales support company Isuzu Global Service Corporation (IGSC) established in the Philippines. Establishment of after-sales support company (Japanese only) Future Initiatives Isuzu would like to contribute to the development of the automobile industry not only in the Philippines but in other countries as well by continuing its support, including the engineering aspects. Project Slogans Quality Training-Our Commitment Brighter Future-Our Gift 17 At the graduation ceremony for the 11th phase At the entrance ceremony for the 15th phase 17

19 Environment Activity Reports 26 Environmental Communication 29 FY 2016 Activity Results (Isuzu Group) 30 FY 2016 Activity Results (Isuzu) Environmental Philosophy and Policy (Charter on the Global Environment) The Isuzu Group has drawn up a Global Environment Charter that clarifies its environmental vision for realizing a rich and sustainable society. Basic Policy Realization of a rich, sustainable society Reduced environmental load of all business operations Collaborative participation in social activities Action Guidelines 1 Create a sustainable society 2 Promote environmental technology 3 Comply with laws and work towards self-imposed targets 4 Formulate an environmental management system and collaborate with affiliate companies 5 Enhance communication with and contribution to society 6 Promote education and training and nurture environmental awareness Agenda of Global Environment Committee 1 Isuzu Group s environment-related initiative policy and plan Isuzu Group s Charter on the Global Environment Mid- to long-term plan, annual plan 2 Progress of activities that follow the Isuzu Group s environmental initiative policy and plan 3 Key matters related to environmental problems surrounding the Isuzu Group Isuzu Group Environmental Promotion Scheme The Isuzu Group has established five bodies under the Global Environment Committee in order to implement environmental conservation activities in all its business operations. They consist of companies affiliated with the Isuzu Group in each of their individual fields, addressing the resolution of various issues to promote better environmental activities. The Global Environment Committee, composed of members from top management including representative officers of various fields, holds meetings every quarter to address the resolution of diverse environmental issues, carrying out discussions and decision-making on matters of environmental conservation. The Isuzu Group also carries out individualized environmental law and regulations training for personnel including sales company representatives and production system company representatives, to deepen their required knowledge of laws and regulations in their respective types of industries. 18

20 Structure of Global Environment Committee Green Procurement Working Group Environment Purchasing Addresses environmental awareness in procurement activities in order to promote environmental conservation together with Isuzu business partners. 18 Logistics Working Group 20 Activity Reports 26 Environmental Communication 29 FY 2016 Activity Results (Isuzu Group) 30 FY 2016 Activity Results (Isuzu) Top Management Committee Members: Representative officers from each division Chair: Senior Executive Officer Global Environment Committee Logistics Design & Development Production Composed of logistics-related Isuzu Group companies. Addresses more efficient, environmentally friendly, and lower CO2 emitting logistics activities in order to promote environmental awareness in operations such as the transportation of completed vehicles or parts used in manufacturing. Product Development Environment Committee Composed of design and development related Isuzu Group companies. Addresses activities for designing and developing greener, cleaner products with lower CO2 emissions, in order to reduce the environmental load of products (vehicles and components). Production Environment Committee Composed of production related Isuzu Group companies both in Japan and oversees. Addresses greener production activities, in order to promote environmental conservation in production. Sales and Support Environment Committee Sales Composed of sales-related Isuzu Group companies. Addresses activities that are greener and reduce the environmental load of distributors, in order to promote environmental conservation in sales. 19

21 Environment 18 Management Approaches Environmental Communication 29 FY 2016 Activity Results (Isuzu Group) 30 FY 2016 Activity Results (Isuzu) Environmental initiatives in procurement activities Isuzu has established the Isuzu Green Procurement Guidelines for promoting environmental conservation together with its business partners, who Isuzu asks to promote environmental conservation activities based on an understanding of these Guidelines. In September 2016, we revised our Green Procurement Guidelines in view of recent social requirements. Isuzu Green Procurement Guidelines (outline) 1 Procurement basic vision / Basic policy / Slogan 2 Our requests for our business partners Requests regarding environmental management 1)Structuring environmental management systems 2 )Notification for personnel responsible for environmental matters 3 )Compliance with related environmental laws and regulations 4)Improvement of economic performance 5) Submission of self-evaluation reports on environmental management systems, and confirmation by Isuzu Requests related to parts, materials, and services provided to our company 6)Managing environmentally hazardous substances 7)Initiatives for management over life cycles 8)Reduction of CO2 emissions and packaging/shipping materials in logistics Supply Chain Management page 75 Environmental initiatives in logistics processes Isuzu engages in environmentally friendly logistics throughout the whole Group, streamlining its various logistics processes such as the transportation of completed vehicles, parts or subsidiary materials used in vehicle manufacture, promoting fuel-efficient driving during transportation, and so on. Reducing CO2 emissions in logistics processes Isuzu is engaged in reducing CO2 emissions in its logistics processes by reviewing the transportation routes of parts, promoting fuel-efficient driving during transportation, and increasing the amount of marine transportation by developing new shipping routes (modal shift). State of modal shift during product vehicle transportation (No. of vehicles) By sea By land Ratio by sea (%) 30, ,000 18,000 12,000 6, , ,550 7,660 6,442 7, ,195 3, , ,979 5,462 5,410 8,996 10,058 12, , ,903 11, , , , (FY) 20

22 Environment 18 Management Approaches Environmental Communication 29 FY 2016 Activity Results (Isuzu Group) 30 FY 2016 Activity Results (Isuzu) Other main initiatives for reducing CO2 emissions Improved transportation efficiency due to thorough truck transport management according to load Increased use of returnable racks that can be folded when returning Increased trailer transportation and improved filling rates of goods within containers In December 2016, we established a new Logistics Center which consolidates the parts warehouses and other facilities in the area of the Fujisawa district into one location. This consolidation has allowed the past procedures for logistics between warehouses to be brought together, which has further increased the efficiency of transportation. The Logistics Center itself was also designed and built with high consideration for the environment, actively using elements such as LED lighting and natural lighting. Reduced amount of packaging materials through review of packaging configurations In the Isuzu Group, packaging configurations are continually reviewed and measures taken to reduce packaging materials. We made returnable racks our global standard in FY2016 and expanded their use within the Group, while also beginning a shift to folding-type transportation pallets. The use of folding pallets has allowed us to reduce the space taken up by empty pallets to 1/4 of what it was, enabling us to promote increased transportation efficiency on the return trips of round-trip services. Initiatives for environment in product development The Isuzu Group has set See Technology as its base concept for development, with the aim of advancing technologies in the three areas of Safety, Economy and Environment. From the aspect of the environment, Isuzu has selected eight priority issues and set up a special committee for each one to address environmentally conscious product development. Improvement of air-conditioning refrigerant Promotion of in-vehicle VOC reduction Fuel economy improvement (global warming prevention) You can find environmental details about automobiles sold by Isuzu below. Promotion of recycling Environmental information by vehicle type (Japanese only) Development and diffusion of next-generation vehicles Reduction of vehicle noise Cleaner emissions Reduction of environmentally hazardous substances *Examples are for automobile models sold in Japan. You can find details about products sold by Isuzu below. Product information Transportation pallets (before improvement) Transportation pallets (after improvement) 21

23 Environment 18 Management Approaches Environmental Communication 29 FY 2016 Activity Results (Isuzu Group) 30 FY 2016 Activity Results (Isuzu) 22 Fuel economy improvement (global warming prevention) Isuzu is engaged in the development of technologies that will meet future Japanese and overseas regulations on fuel economy and CO2 emissions and achieve top-level fuel efficiency. In FY2016, all applicable vehicle models achieved their fuel economy targets. Cleaner emissions Isuzu is engaged in the development of high-efficiency diesel engines that will combine compatibility with future emission regulations and improved on-road fuel efficiency. In FY2016, we began production of new engines to meet future emission regulations. Reduction of vehicle exterior noise Isuzu is engaged in the development of noise reduction technology to meet future Japanese and overseas noise regulations, and the timely introduction onto the market of sound regulation compliant vehicles. In FY2016, we promoted technological development for further noise reduction and strengthened support for regulations, and successfully reached our in-house targets. Reduction of environmentally hazardous substances Isuzu is addressing the further reduction of environmentally hazardous substances and the reinforcement of its management system using IMDS. In FY2016, we continued to reduce the amount of substances restricted by various regulations (ELV Directive, etc.), proceeding with initiatives toward their total elimination, and successful ly reached our in-house targets. Improvement of air-conditioning refrigerant Isuzu is engaged in developing a new refrigerant system suitable for buses and trucks. In FY2016, we continued to thoroughly enforce our management of refrigerants in compliance with the regulations set forth by various countries, while promoting the development of new refrigerant systems able to meet legal regulations, and successfully reached our in-house targets. Promotion of recycling Isuzu is engaged in the promotion of recycling-oriented design that will contribute to the more effective use of resources. In FY2016, we continued to promote the design of products compliant with domestic and overseas recycling laws, while advancing our design of products with consideration for even further recyclability, and successfully reached our in-house targets. Promotion of in-vehicle VOC reduction Isuzu is committed to reaching its voluntary targets for reducing in-vehicle VOC emissions and to the development of an assessment method. In FY2016, we carried out development initiatives aimed toward further reduction of in-vehicle VOC emissions, and successfully reached our in-house targets. Development and diffusion of next-generation vehicles Isuzu is addressing the market penetration of hybrid vehicles and natural gas fueled vehicles, which help to lower CO2 emissions. In FY2016, we continued to promote various types of technological development, and successfully reached our in-house targets. Addressing the environment in production activities To reduce the environmental load of the Isuzu Group s production activities, its manufacturing companies in Japan and overseas all work together to reduce the energy and resources used, the amounts of harmful chemical substances, and the waste generated during manufacturing. Promoting green production activities CO2 emission reduction activities By increasing the efficiency of processes in all of our Group companies, reviewing and properly managing our operation methods, and promoting the visualization of our energy usage, we were able to significantly reduce the amount of energy used. We are producing substantial results over the entire Isuzu Group by reviewing our conventional operation methods to discover further types of energy conservation activities, and deploying them across our companies. Waste reduction activities As well as carefully separating waste on a routine basis, Isuzu also takes a positive approach to waste reduction activities. Additionally, we are reducing the amounts of materials themselves which are used by properly managing the usage of those materials and promoting shifts to returnable items as well as material recycling. We are making active efforts as a Group toward fundamental resource conservation activities which involve reducing the amount of waste that is generated. Chemical substance reduction activities We are taking the lead to work on activities to replace chemicals containing hazardous substances that could have an environmental impact, with chemicals not containing such hazardous substances. While replacing the substances we use with those which have less potential for harm, we are reducing the actual amounts of chemical substances used by reviewing our processes. Activities to control emissions of ozone depleting substances We are promoting activities aimed at controlling the emission of ozone depleting substances throughout the Isuzu Group, limiting emissions of ozone depleting substances by reinforcing the inspection of facilities using CFCs, and installing non-cfc equipment during facility upgrades.

24 Environment 18 Management Approaches Environmental Communication 29 FY 2016 Activity Results (Isuzu Group) 30 FY 2016 Activity Results (Isuzu) 23 Production Group environmental meetings Isuzu Group companies concerned with production regularly hold meetings to present examples of their activities and review specific cases. This helps to promote more efficient production activities by horizontally developing all the companies knowhow and skills. Isuzu Group Energy-Saving & 3R Awards Scene at Production Group environmental meeting Among production-related Group companies, the Isuzu Group Energy-Saving & 3R Award have been implemented since FY2013. Entry activities related to energy conservation or 3R improvements are gathered from within the Isuzu Group, mainly its Production Division, the best of which receive an award. Examples of entries are shared throughout the Isuzu Group to promote horizontal development. These awards are aimed at providing further momentum to the Group s environmental activities. FY2016 Energy-Saving Award [Reducing power costs through proper operational adjustment of electrodeposition baking furnace exhaust treatment equipment (Isuzu Motors)] The process of coating is one accompanied by high energy usage since it involves exhaust treatment devices (deodorization furnaces) which are kept at a temperature of 700 C to thermally decompose harmful substances and render them harmless. In the past, such devices were operated under the same conditions constantly day and night, regardless of production volume. Now, however, we have carried out activities to improve our operation methods so that their operation can be linked with production volume and varied accordingly. Although it was a considerably difficult task to calculate the optimal conditions for controlling their operation status in order to meet the concentrations of harmful substances specified by emission standards, while also maintaining product quality, we implemented measures for manual control of their operating conditions to yield results showing reductions of 360 MWh/year in electric power, and 515,600 m 3 /year in city gas used for combustion. As our next step, we are currently proceeding with methods of switching over to operation that can vary automatically. Award winning members FY2016 3R Award [Reducing the amount of TPs (test pieces) for scrapping after induction hardening inspections (Jidosha Buhin Kogyo)] A procedure called shot blasting is used in product inspections which are conducted after induction hardening of machined components. After shot blasting has been performed on a test piece, however, the overall product is damaged and there was previously no alternative but to dispose of it. This disposal of test pieces was something we saw as wasteful, and it prompted us to review our inspection methods. We have now succeeded in creating equipment and setting conditions ourselves so that shot blasting can be performed only on areas of test pieces requiring inspection, causing no damage to the overall products. By introducing this method into our product inspections, we are now able to recover nearly all test pieces which previously would have been scrapped, eliminating the need to dispose of an estimated 19 tons of test pieces per year. At the Ebina Plant of Jidosha Buhin Kogyo where this method was implemented, it is expected for roughly 41 tons of metallic waste which would normally have been disposed of to be reduced to roughly 22 tons. Furthermore, since the items which are not scrapped can now be shipped out as products, this initiative has also led to an extensive reduction of energy and materials used to manufacture products, as well as energy used for disposal. Award winning members

25 Environment 18 Management Approaches Environmental Communication 29 FY 2016 Activity Results (Isuzu Group) 30 FY 2016 Activity Results (Isuzu) With our conventional past methods, shot blasting in product inspections involved blasting abrasive material over the entire body of each test product. Since shot blasting was performed over an entire piece, it could no longer be used as a product and there was no alternative but to dispose of it, a Jidosha Buhin practice we had always viewed as highly wasteful. Kogyo Co., Ltd. Although at first consideration it sounded like a Quality Assurance simple idea to fire shot only at the portions of Dept. pieces required for inspections, perform inspections Horii Kenji only on specific areas, and therefore be able to recover those pieces, actual tests and experiments on it were continual struggles of trial and error to examine and re-examine special measures for jigs, shot methods, and shot material. It took many months of repeated testing before the best conditions could be found. The result of this hard work, however, was success in creating equipment and setting conditions so that products would not undergo damage. Since this has allowed us to significantly reduce the consumption of resources and energy used for disposal, I feel that all of our efforts were more than worth it. This initiative can also be deployed to other inspections on similar induction hardened products, so we are eagerly looking forward to even greater results. Environmental initiatives in sales activities To promote environmental conservation in the Isuzu Group s sales activities, its distributors all work together to conduct green sales and engage in environmental load-reducing activities. Environmental load-reducing activities of Isuzu dealers in Japan Efforts to increase environmentally friendly sites Isuzu is trying to increase its environmentally friendly sites by actively installing LED lighting or skylights, and introducing reusable energy systems, when renovating or building new sales offices. At newly built sites, we are promoting transitions to water treatment facilities that are more environmentally conscious than existing ones, by installing biological effluent treatment equipment for treating water discharged during vehicle maintenance or vehicle washing. Example of new environmentally conscious site (Isuzu Motors Shutoken Fujisawa Branch and Service Center) Environmental improvement activities in Japan Isuzu sales offices are optimizing their environmental efforts through evaluations using their own environmental check sheets and promotion of improvement activities. Isuzu aims to increase its environmentally friendly distributors by entering and winning more awards under the Eco-friendly Auto Repair Shop awards system of the regional transport bureaus of the Ministry of Land, Infrastructure, Transport and Tourism. 24

26 Promotion of green sales activities in Japan Isuzu distributors are doing all they can for the environment in their overall business activities. Environment 18 Management Approaches Environmental Communication 29 FY 2016 Activity Results (Isuzu Group) 30 FY 2016 Activity Results (Isuzu) They are continuously addressing all possible environmental activities, such as using hybrid vehicles and other environmentally friendly vehicles as new company cars, implementing the Cool Biz, Warm Biz, and Light Down campaigns, and holding local area cleanup activities. Running courses on fuel-efficient and safe driving Considering the life cycle of Isuzu products, the largest CO2 emissions come from using products (vehicles). The Isuzu Group has been holding seminars on fuel-efficient driving in Japan and overseas since 1995, to inform customers who have bought an Isuzu vehicle about ways of driving more efficiently according to the performance of their vehicle. Track record over the past 3 years Year Courses Participants FY ,447 FY ,714 FY ,769 Safe and ecology driving practice in session 25

27 Environment 18 Management Approaches 20 Activity Reports FY 2016 Activity Results (Isuzu Group) 30 FY 2016 Activity Results (Isuzu) The Isuzu Group aims to achieve excellent environment-related communication with its various stakeholders, including its customers, business partners, surrounding areas, shareholders, investors, and employees. To do so, we participate in environmental activities in surrounding areas and actively release environmental data. By enhancing our environment-related communication, the Isuzu Group aims to promote greater recognition and understanding of our environmental activities so we may carry out further improvements, and to develop our employees into outstanding members of society by actively releasing information within our company to raise their awareness. Since FY2016, Isuzu has strengthened its public external disclosure of environmental information. Replies to CDP2016 Basic Ideas Enhancement of environmental information disclosure We have provided replies to CDP2016 so that we may properly disclose information on measures we are involved in to address climate changes. Our CDP2016 score is B, reflecting the improvements that we have made to our activities. From here on, we will actively implement further activities to address climate changes based on this content. Participation in activities for surrounding areas Participation in the 21th Fujisawa Environment Fair The 21st Fujisawa Environment Fair: Let s Think and then Try! ECO2 Festival 2016 was held in November 2016 at the Fujisawa Civic Hall. This event is held annually as a cooperative undertaking by citizens, business operators, universities, governmental bodies, and various other parties from Fujisawa City with the themes of environmental conservation and global warming prevention. It is intended to be an event where people can learn about the environment while enjoying themselves, and has been participated in every year by Isuzu. As well as presenting its green initiatives at the event site, Isuzu also introduced panels on the DeuSEL bus, which obtained high recognition by the people of the community during its operation as a shuttle bus and offered many opportunities to ask questions, as well as the DeuSEL project. These allowed visitors to gain a greater understanding of Isuzu s initiatives. Isuzu exhibition booth Participation in Project for Arrangement of Infrastructure for Environmental Information Disclosure We participated in the Ministry of the Environment s Project for Arrangement of Infrastructure for Environmental Information Disclosure, intended to encourage dialogues with investors and other groups, and have posted our environmental information to the project s portal site. Our participation in this project has allowed us to carry out dialogues with individual investors and other parties, and has facilitated our environmental activities. 26

28 Environment 18 Management Approaches 20 Activity Reports FY 2016 Activity Results (Isuzu Group) 30 FY 2016 Activity Results (Isuzu) As a company engaged in business in Fujisawa City, we participate in the Fujisawa Environment Fair so that the people of the local community can find out about our environmental measures while we carry out PR activities. On the day of the event, we provided explanations to local citizens Labor Relations Dept. about our DeuSEL project and about the Elf truck General Affairs, Safety & which is produced at our Fujisawa Plant. At that Health Group Fujisawa Plant Personnel time, we accepted questions about our ideal Administration Group visions and current conditions of environment-friendly vehicles, and about our future Umeno Fuminori deployment plans, making it a valuable opportunity for us to gain a firsthand impression that the environmental awareness of everyone in the area is growing year by year. Through activities like this, we hope that the people of areas who give their support to us on a daily basis can obtain more thorough knowledge of Isuzu s initiatives, and we intend to dedicate ourselves to becoming worthy of their trust as an even more closely-connected company. Participation in Shinagawa CSR Promotion Council Isuzu has been a participant in the Shinagawa CSR Promotion Council since FY2016. This activity is intended to develop Shinagawa Ward with an image of our town, through collaboration between corporations who are located there and the ward itself. To do this, it promotes company-run social contribution activities and other projects, and conducts a variety of activities for the purpose of encouraging coordination with corporations. We participated in joint cleanup and beautification activities as a member company for the first time in March 2017, and together with 125 participants from 31 offices, learned about the importance of participating in community projects through programs to clean the local area. We will continue to promote environmental activities deeply rooted in local communities from here on, by interacting closely with wards and other companies. Working together with participating companies Participation in tree-planting activities Participated in 22st Spring Tree-Planting Day at the former Ashio Copper Mine Continuing from last year, Tochigi Plant employees took part in the planning of tree planting on the hills of Ashio district, which were devastated by smoke and other pollution from the former Ashio Copper Mine. It is said that it will take more than 100 years for the greenery to fully return to the hills of Ashio, and so volunteers from within the prefecture have been involved in tree planting activities there since volunteers from Isuzu participated in the 22nd Spring Tree-Planting Day held in April 2017, climbing up steep hilly areas to plant 13 varieties of saplings. Seeing the scenery of the devastated hills before their eyes offered the participants a valuable opportunity to reexamine environmental issues nearby. Participation in tree-planting activities Traveling to the tree-planting site 27

29 Environment 18 Management Approaches Conservation of biodiversity The Isuzu Group promotes the conservation of biodiversity through activities to protect the unique natural environments in the areas of each of its offices, while referring to materials such as the Ministry of the Environment s Guidelines for Private Sector Engagement in Biodiversity and the Declaration of Biodiversity by Keidanren. We will continue activities such as these in the future, to preserve even more abundant ecosystems in the Fujisawa Plant. 20 Activity Reports Example of Isuzu Fujisawa Plant 26 A study was implemented by experts to investigate the organisms inhabiting the premises of the Isuzu Fujisawa Plant. The study revealed that due to insufficient care of the forests within the Fujisawa Plant, their true abilities to function as satoyama (community Isuzu employees tending the trees Searching insects on the lawn forests) have weakened, leading to imbalances in the ecosystems that could 29 FY 2016 Activity Results (Isuzu Group) 30 FY 2016 Activity Results (Isuzu) be identified in their surrounding regions. In consideration for such research results, we have begun to care more thoroughly for these forests through measures undertaken by company volunteers from fiscal 2016, and are striving to restore them to their former richness. These activities have helped to bring natural sunlight into the forests, increasing the number of grass and plant species growing in their lower layers from 23 species in fiscal 2015 before the activity, to 38 in fiscal We are also conducting experiments to confirm the changes in ecosystems resulting from revised grass management methods implemented at certain areas on the premises in order to preserve the biodiversity of species living there. By changing the cutting height of grass within the premises, this activity is intended to form living environments excellent for insects and other organisms by creating grassland environments with varying heights of grass. The experiment has shown notable results, with the number of identified grasshopper species increasing from 3 before the experiment to 7 after its implementation. 28

30 CO2 emission reduction activities Activities to reduce CO2 emissions per unit of sales Waste reduction activities Industrial waste landfill reduction activities Environment 18 Management Approaches 20 Activity Reports 26 Environmental 29 Communication * Environmental activity results of 21 production-related Group companies (9 in Japan and 12 overseas) 30 FY 2016 Activity Results (Isuzu) Mid- to long-term target: At least 6% below FY2010 figure by FY2016 FY2016 results: CO2 emissions: 501,000 tons CO2 emissions per unit of sales: 25.7 tons/ 100 M (13.8% down from FY2010) Trends in CO2 emissions & emissions per unit of sales CO2 emissions (1,000 tons) CO2 emission rate (per sales) (tons/ 100 M) Isuzu main Domestic production group Overseas production group Emission rate improvement result Emission rate improvement target We have actively engaged in CO2 emission reduction activities in Japan and overseas, successively reaching our targets since fiscal We even reached our targets at sites that use more energy than before due to added production lines or the introduction of new equipment, through continuous efforts to reduce total energy usage by promoting streamlining such as consolidating production lines (FY) Mid- to long-term target: Reduction of landfill waste generation, maintenance of rate of 1% or less for entire company Landfill amount (tons) = 1% or less of total waste generated (tons) (Domestic production group only) FY2016 achievements: Landfill amount (tons) / Total waste generated (tons) = 1.10% (All production group) Landfill amount (tons) / Total waste generated (tons) = 0.44% (Domestic production group) * Final landfill amount: 2,679 tons (Domestic production group: 745 tons Trends in final landfill amount (%) Domestic production group Overseas production group Target 1% or less In the domestic production group, recycling has been implemented and a stable rate of landfill of below 1% maintained. In the overseas production group, although there is a trend toward an increase in landfill for reasons of disposal costs etc., we are continuing to promote recycling and working to decrease landfill amounts. (FY) 29 * In FY 2011, the amount of landfill in Japan temporarily increased because of the impact of the Great East Japan Earthquake on recycling contractors. * In FY 2013, the amount of landfill temporarily increased because some recycling contractors were limited in how much waste they could accept due to the processing of debris from the 2011 earthquake.

31 Environment 18 Management Approaches 20 Activity Reports 26 Environmental Communication 29 FY 2016 Activity Results 30 (Isuzu Group) Isuzu s Environmental Management Systems In FY2016, Isuzu unified its environmental activities across all of its bases. In December 2016, it achieved integrated certification according to international standard ISO14001 for its environmental activities, which had previously been separately and individually certified for each base. When acquiring integrated certification, it also carried out migration to the newest 2015 edition standard, to concurrently achieve integrated migration certification. Group companies which had already acquired ISO14001 certification are currently proceeding in sequence to migrate to the 2015 edition. Violations and Accidents related to Environmental Laws and Regulations in FY2016 Isuzu had no violations or environmental accidents related to environmental laws and regulations during FY2016. Environmental Education In FY2016, Isuzu provided environmental education to all of its employees. This educational program combined e-learning with group training, as a means of reducing CO2 generated by employee travel associated with training participation. In addition, we held training on environmental laws and regulations, and training for internal environmental auditors, with the goals of deepening the understanding of such matters by employees engaged in business operations and improving their capabilities. Initiatives to Control Chlorofluorocarbon Emissions CO2 emission reduction activities Both our Fujisawa Plant and Tochigi Plant are engaged in efforts to reduce their total usage by promoting measures for higher efficiency, such as re-examining their production conditions and consolidating their production lines. In terms of logistics, we are encouraging modal shifts and promoting higher transportation efficiency to reduce CO2 emissions. Trend in CO2 emissions from energy CO2 emissions (t-co2) 250, , , ,000 50, , ,711 3, ,283 3,682 3,237 79,457 64,919 67, , , CO2 emissions (t-co2) 40,000 37,472 30,000 20, Fujisawa Plant Tochigi Plant Oomori Headquarters 224, , ,287 3,728 3,787 3,307 81,400 83,015 83, , , , , Trend in CO2 emissions from logistics ,658 39,698 39, ,526 3,772 81, , (FY) 30 In response to the Act for Control of Chlorofluorocarbon Emissions (Act on Rational Use and Proper Management of Fluorocarbons) effective from April 2015, Isuzu is promoting proper refrigerant management for business-use refrigeration air conditioning equipment and other equipment using chlorofluorocarbons at all of its bases, and is implementing inspections of all such equipment. While this act requires reports to be submitted if any business operator has a calculated chlorofluorocarbon leakage volume of 1,000 t-co₂/year or greater, Isuzu has confirmed that its total leakage volume for FY2016 was lower than the reporting requirement value. 10, (FY)

32 Environment 18 Management Approaches 20 Activity Reports 26 Environmental Communication 29 FY 2016 Activity Results 30 (Isuzu Group) Proper Management of Emissions and Wastewater By properly managing boilers and other such plant facilities which produce soot and smoke, we measure the amounts of air pollutants such as NOx (nitrogen oxides) and SOx (sulfur oxides) in our emission gases, to confirm that they are within regulated values*. Furthermore, wastewater from our factories is processed by treatment equipment before being discharged to sewer systems and public water areas. The discharged water is analyzed on a regular basis and confirmed to be within regulated standard values. * Regulated standard values are determined using laws or ordinances, whichever is the stricter regulation. Fujisawa Plant: 8 Tsuchidana, Fujisawa City, Kanagawa Prefecture Air Item NOx(ppm) Soot and dust (g/nm 3 ) Equipment Regulated Measured Value Value Maximum Average Boilers Metal melting furnaces Paint baking furnaces Boilers Metal melting furnaces Paint baking furnaces * Since all facilities producing soot and smoke use city gas as their fuel, SOx is excluded from the scope of measurement. Water quality Discharge destination: Hikiji River Item Regulated Measured Value Value Maximum Minimum Average ph COD(mg/L) BOD(mg/L) SS(mg/L) Oil content (mg/l) Tochigi Plant: 2691 Hakuchu, Ohira-Machi, Tochigi City, Tochigi Prefecture Air Item NOx(ppm) SOx (Nm 3 /h) Soot and dust (g/nm 3 ) Equipment Regulated Measured Value Value Maximum Average Boilers Metal melting furnaces Gas engines Total volume regulation Boilers Metal melting furnaces Gas engines Water quality Discharge destination: Nagano River Item Regulated Measured Value Value Maximum Minimum Average ph COD(mg/L) BOD(mg/L) SS(mg/L) Oil content (mg/l) VOC emission reduction activities Isuzu is curbing emissions by the recovery of VOC (volatile organic compounds), and has reduced VOC emissions from its plants and reviewed and improved its painting processes, which have particularly large VOC emissions. Trend in total VOC emissions* Total VOC substance emissions (kg) 800, , , , , , , (FY) 31

33 Environment Water usage reduction activities Because large volumes of water are used in automobile manufacturing, Isuzu has started to address the conservation of the earth s limited water resources. We have been trying to understand the state of water usage within the company and, from fiscal 2015, started a water risk survey in order to Land Contamination Management To prevent health hazards resulting from land contamination, Isuzu performs studies on land contamination conditions based on the Soil Contamination Countermeasures Act when carrying out new construction or construction work larger than a specified scale. 18 Management Approaches 20 Activity Reports understand the water risk in Isuzu. Trend in water resource usage* In FY2016, we built our new Isuzu Plaza, Isuzu Plaza Annex, and Logistics Center in the Fujisawa district. During construction of these facilities we performed studies on land contamination conditions in their areas and 26 Environmental Communication Water resource usage (m 3 ) 2,500,000 Public water Total wastewater Industrial water confirmed that there was no contamination. 29 FY 2016 Activity Results (Isuzu Group) 2,000,000 1,500,000 1,555,660 1,573,415 1,729, ,000 1,839,093 1,906,487 1,830, , , , , (FY) Discharge reduction activities Isuzu is promoting the effective use of waste and engaging in activities to reduce discharge that includes valuables. By trying to curb emissions of both waste and valuables, we are working toward the formation of a recycling-oriented society. *Isuzu has already achieved zero emissions, with no landfill since Trend in discharge emissions* Waste emissions (tons) 10,000 8,000 6,000 Industrial waste 87, Ordinary waste 84, Valuables emissions Valuables (tons) 96, , ,000 60,000 4,000 2,000 7,337 7,235 6,148 40,000 20, (FY)

34 Environmental accounting To conduct environmental activities efficiently and continuously, Isuzu has Environment 18 Management Approaches 20 Activity Reports 26 Environmental Communication 29 FY 2016 Activity Results 30 (Isuzu Group) added up its environmental conservation costs and environmental conservation effects. Isuzu has disclosed information with the aim of helping management decisions to carry out efficient investment in environmental activities, and as an evaluation index for businesses. Environmental conservation costs (Target period: April 1, 2016 to March 31, 2017) Total investment was 4,419 million, 418 million up year on year. Total expenses were 42,146 million, 1,090 million up year on year. Details are shown in the table below. Unit: 1 million Investment Expenses Main activities Pollution prevention costs Implementing air pollution prevention, water contamination prevention, etc. Business Global environmental area costs conservation costs Implementing energy-saving activities, climate change strategy, etc. Resource recycling costs Implementing proper disposal of waste, upgrades to waste disposal sites, etc. Upstream/downstream costs 0 1,918 Implementing reuse of used automobiles, promoting 3Rs for waste Management activity costs Promoting environmental management, updating system for gathering information such as environmental data R&D costs 3,488 38,370 R&D of eco-friendly products in terms of emission control, etc. Social activity costs 0 40 Supporting environmental conservation activities such as tree planting, donating to environmental conservation organizations Environmental damage costs 0 19 Levies on pollution impact, conservation measures related to soil and groundwater pollution, etc. Total 4,419 42,146 Environmental conservation effects (Target period: April 1, 2016 to March 31, 2017) Category Kind of effect Effect Economic effect (millions of yen) Quantitative effect (tons) Reduction in energy cost through energy conservation 28 Profit on sale of valuables 905 CO2 reduction (tons of CO2) 2,686 33

35 Business activity and environmental hazard Environment Through a product life cycle (development, procurement, manufacturing, logistics, product operation, and disposal), Isuzu reduces environmentally hazardous substances. They are analyzed in each process with focus on the ones likely high. 18 Management Approaches 20 Activity Reports FY2016 Material flow (Isuzu only) 26 Environmental Communication 29 FY 2016 Activity Results 30 (Isuzu Group) INPUT Raw material input amount Iron & steel 57,000 tons Aluminum 9,000 tons Raw materials 145,000 tons Energy input amount 110,014kL (crude oil equivalent) Electricity usage 319,664,000 kwh Reusable energy 241,000 kwh LPG 556t LNG 15,630t City gas 29,143,000 m 3 Water resource input amount 2,005,000 m 3 Development / Design Procurement Production Products OUTPUT Greenhouse effect gas CO2 emissions 222,000 t-co2 Emissions Waste 6,300t Final landfill 0t Valuables 76,700t VOC emission rate 17.7g/m 2 Water discharged 1,730,000m 3 Product shipping volume 306,000 units (CV only) Transportation CO2 emissions during transportation 39,267t-CO2 Sales/Usage/Service Recycling Recycling result ASR 97.9% Air bags 93.6% 34

36 Basic Ideas Total quality assurance system Our corporate vision is Isuzu will always mean the best. A leader in trans- Isuzu is prepared itself for full social and quality responsibilities as a manu- portation, commercial vehicles, and diesel engines, supporting our custom- facturer under the Isuzu quality assurance scheme structured as shown Quality 35 ers and respecting the environment. This is the very basis of all our quality activities, through which we provide useful products and services to our customers. Initiative Policy By making quality our first priority, we at Isuzu create products that satisfy our customers in a profound way, and our goal is to contribute to society as a company with a rich sense of humanity. below. Quality Assurance Division lead Isuzu s united efforts toward enhanced quality. The Quality Assurance & Customer Satisfaction Improvement Committee (Quality Assurance / CS Committee) is chaired by the director and is held monthly so that the top management of all divisions can have discussions and share information on the quality status as well as the monitoring operation status of the quality management systems of the divisions. The outcomes are shared to drive forward the quality assurance activities of the 37 Initiatives for higher product quality 39 Initiatives for higher service quality Isuzu provides products and services that fully satisfy customers. If, however, a customer does have trouble with an Isuzu vehicle, we have established service systems and service parts supply systems for quick recovery so that customers can rest assured in using Isuzu s products every day. In doing this, Isuzu is committed to building long-term, trusting relationships business divisions. Isuzu quality assurance system Top Management President and Representative Director 45 Initiatives for higher operation quality with customers. Quality Assurance & Customer Satisfaction Improvement Committee Chair: Director Monitoring operation status of the quality management systems of the divisions Management review Customer claim status Proposal for field measures Report proposal Monitoring 監視 response 対応 Improvement direction Approval for field measures Divisions Quality management system operation Isuzu has set forth a quality policy of creating and delivering products that satisfy our customers. We promote quality assurance activities throughout our entire company, based on the concept that improving the business quality, beginning with product quality and service quality, of each division in our company and even extending to indirectly-associated divisions, will enable us to provide products and services of even higher quality to our customers. By communicating our quality policy across the company and sharing quality manuals on a company-wide basis, we are taking action to improve the quality of our daily business operations. Quality Assurance Division Division of duties: Director Engineering Division Production Division Purchasing Division Sales Divisions After-Sales Division PT Business Division Corporate Planning & Finance Division Administration Division 35

37 Quality 35 Quality management system (Acquisition of ISO 9001 & ISO/TS 16949) All Isuzu offices have been certified with ISO9001:2015, an international standard of quality management. Moreover, components to be delivered to GM (General Motors, based in the U.S.) are certified with ISO/TS16949:2009, the standard for the automobile sector. Isuzu has been striving to enhance its operational quality using such measures. 37 Initiatives for higher product quality 39 Initiatives for higher service quality 45 Initiatives for higher operation quality PT-related TS16949 certificate Future Initiatives Based on the concept of creating and delivering products that satisfy our customers, Isuzu will strive to achieve further improvements in product quality, service quality, and operation quality. Vehicle-related ISO9001 certificate 36 PT-related ISO9001 certificate

38 Basic Ideas A number of activities have been undertaken to improve quality in stages Quality 35 Management Approaches Initiatives for higher service quality 45 Initiatives for higher operation quality from product development, production and to driving in markets. Initiatives at the development stage Our product development philosophy is to gain the trust of every person. This is supported by the basic concept of S.E.E. Technology, where S.E.E. stands for the three important issues of Safety, Economy, and the Environment. To acquire the high quality to underpin this philosophy, we set quality gates (milestones) at different stages in product development, where the quality and the maturity of the products are confirmed so that product development can proceed. During the development stages below, Isuzu focuses on failures and preventing the recurrence of failures. Failure Mode and Effect Analysis (FMEA*) and other methods are used to enhance reliability and durability. * Failure Mode and Effect Analysis: This systematical analysis approach helps to discover potential failures and prevent failures and defects. Isuzu production line where IM has been introduced Manufacturing Quality (IM) Initiatives for higher field quality Isuzu constantly strives to make improvements by listening to and analyzing customer opinions, which are fed back into each quality-related process to ensure never-ending improvements in field quality. Quality Gates Initiatives toward improved field quality 37 Plan Design Assess Initiatives at the manufacturing stage Start production Isuzu is reinforcing its human resources and production systems to offer high-level integrated products on a worldwide scale. In particular, the concept, method and production knowhow of Isuzu manufacturing for quality first are integrated into ISUZU MONOZUKURI (IM). IM is a production method implemented in every Isuzu manufacturing plant in Japan and overseas countries. Its concept is to produce Isuzu badged products with the same manufacturing method and quality control system at any production plant around the world. While trying to realize quality assurance on a global scale, Isuzu endeavors to become a company trusted by every customer who needs Isuzu commercial vehicles and diesel engines. Taking advantage of the FQ management sytem*, Isuzu collects quality information from markets and then implements cause investigations and responds to issues promptly and accurately. Isuzu Customer Center (Japan) gathers customer opinions, warranty repair records, and improvement requests from sales distributors as field quality information to direct to our quality improvements. The collected information is used in our efforts to comply with regulations from various countries including domestic safety regulations for road vehicles, and to respond to them even more quickly. We also share information regarding the status of our response to field quality information and quality activities with top management and all employees on a monthly basis, through our Quality Improvement Newsletter. * FQ (Field Quality) management system Activities to develop and improve quality information gathered from the field by the system shown on the page 35.

39 Field quality improvement activity (FQ management system) Quality 35 Management Approaches Initiatives for higher service quality 45 Initiatives for higher operation quality Domestic Customer Repair Answer Domestic Isuzu dealers Inquiry Answer Report Feedback Report Service Isuzu Customer Center Overseas Repair Report Customer Overseas Dealers Service Answer Feedback Feedback Isuzu Motors Limited Quality Assurance & CS Committee Field quality improvement activity Quality Assurance Confirm Development Production Business partners including parts suppliers Initiatives for Recall Campaigns The activities are intended to prevent defective vehicles from causing accidents and to ensure the safety of our business partners and drivers and their assets. Based on the purpose of these activities, we ensure that our customers vehicles operate properly by conducting recall/improvement measures/service campaigns if necessary. We are always prepared to take prompt and accurate actions from the customer s perspectives in various circumstances. Recall cases (in Japan) FY2015 FY cases 9 cases Recall Information 38

40 Quality 35 Management Approaches 37 Initiatives for higher 39 product quality Basic Ideas Isuzu provides standardized support both in Japan and overseas so that we can offer high-quality services. Thorough service system Isuzu is currently fully committed to the post-delivery customer support services. Our customers always expect high quality. Therefore, we at Isuzu aim to establish high-quality integrated service systems for customers in Japan and overseas. Service system (Japan) Service system (Overseas) 45 Initiatives for higher operation quality Sales/Service Network (Japan) (Japanese only) Hokkaido 18sites Distributors Network Chugoku/ Kinki Shikoku 17sites Kyushu 25sites 27sites Chubu 50sites Kanto 69sites Tohoku 44sites Europe Approximately 1,170 sites Middle East Approximately 240 sites Africa Approximately 140 sites Asia Approximately 430 sites ISUZU ASEAN Approximately 400 sites Oceania Approximately 140 sites North America Approximately 320 sites Latin America Approximately 380 sites 39

41 Parts supply system Quality 35 Management Approaches 37 Initiatives for higher 39 product quality Isuzu delivers service parts quickly and accurately to all areas via its network of our mother parts center (Tochigi, Japan) and regional parts centers in Japan and overseas. Domestic Seven regional parts centers ship the service parts to the service parts sites of Isuzu dealers. Parts supply system (Japan) Overseas The Isuzu service parts supply network has been extended to our regional parts centers in the Middle and Near East, Northe Africa, Central America, Europe, the ASEAN region, and Oceania in addition to our distributors across the globe. Parts supply system (overseas) 45 Initiatives for higher operation quality Mother parts center (Tochigi) Regional parts center Hokkaido Mother parts center (Tochigi) Regional parts center Europe region Isuzu Motors Europe NV. Kyushu Kansai Chubu Keihin Tohoku Northern Kanto Isuzu Motors Middle East FZE. Middle and Near East, North Africa (including some parts of Asean region the Sub-Saharan region) Isuzu Motors Asia, Ltd. Oceania region Isuzu Motors Australia, Ltd. Isuzu Motors America, LLC. America region 40

42 Quality 35 Management Approaches 37 Initiatives for higher product quality Improvement of maintenance engineering Isuzu World Service Skills Contest (Ⅰ-1GP) Held At the Isuzu World Service Skills Competition (I-1 GP), outstanding service staff and mechanics from countries and regions all over the world gather to compete in skill and knowledge in order to raise their own country s level of service. The competition is to determine which is the greatest team in the world, the goal being to give Isuzu customers maximum satisfaction anytime, anywhere. 11th CV Division Competition (Japan, December 1, 2016) The CV Division of the 11th Isuzu World Service Skills Competition (I-1 GP) was held at the Isuzu Monozukuri Service Training Center in Fujisawa, Japan. The competition is divided into two categories according to the emissions regulation level of the vehicles deployed in each team s country. A total of 30 countries took part, 10 in Category A and 20 in Category B. * Category A: Emissions regulation level Euro 5 or equivalent * Category B: Except Category A Initiatives for higher operation quality 11th LCV Division Competition (Thailand, November 3, 2016) The LCV Division of the 11th Isuzu World Service Skills Competition (I-1 GP) was held in Bangkok, Thailand. A total of 22 countries took part, including three newcomers, Paraguay, Guatemala and India. Supporters from the various countries and many other people concerned came to watch this highly skilled competition. Scene from CV Division competition. Competitors were nervous but trusted in teamwork and their own skills as they tackled the tasks. 11th CV Division Competition (Japan, December 1, 2016) Competitors earnestly engaged in the skills and written tests. ["11th LCV Division" (November 3, 2016), participants from 22 countries] Category Rank Country Representative Company Category A 1st place Japan Isuzu Motors Kinki Co., Ltd. 2nd place Australia Isuzu Australia Ltd. Category B 1st place Indonesia P.T. Isuzu Astra Motor Indonesia 2nd place Colombia GM-Isuzu Camiones Andinos de Colombia, Ltda. 41 Rank Country Representative Company 1st place Indonesia P.T. Isuzu Astra Motor Indonesia 2nd place Philippines Isuzu Philippines Corporation

43 Quality 35 Management Approaches 37 Initiatives for higher 39 product quality 45 Initiatives for higher operation quality Service/Parts Skill Competition Isuzu holds an annual skill competition in which workers compete on a collection of all their day-to-day technologies. National Service/Parts Skill Competition (Japan) The competition is held every year with the slogan Impressive services for our customers with our established techniques and customer-oriented mind-set! Isuzu encourages education and training programs because they help Isuzu After Sales staff to enhance their engineering skills, which leads to higher customer satisfaction. The competition also provides motivation and its aim is to strengthen ties among staff members while they compete with each other in individual matches to be the best in the country. FY2016 achievements FY2016 National Service/Parts Skill Competition (November 2016) Approximately 154 participant members from all over the country were qualified to the final. Practical training at the Monozukuri Service Training Center Feedback from participants Since I was able to learn about techniques for customer response, an area which I had some concerns about, I will put them into practice and try to the best of my ability to prevent any complaints from arising. (Service representative from distributor) The examples of failure cases and repair procedures for new models were very easy to understand. (Maintenance staff from distributor) I want to spread this information within my company so that work can be performed even a little more efficiently, and I hope to be able to successfully apply what I have learned from this course. (Maintenance staff from distributor) Scene from finals in competition Training employees of Isuzu distributors We offer training programs to the employees of the distributors that support transport for Isuzu s customers, so that they can boost their maintenance engineering skills and learn more advanced repair techniques. FY2016 achievements Customer support Fuel efficient and safe driving seminars and various support programs Isuzu has been offering our customers seminars on fuel efficient and safe driving since In Fujisawa Plant, we have an on-site seminar facility called Isuzu Premium Club, which is exclusively for our customers. It is equipped with test courses so that we can offer more versatile seminars with rich material. 42 Education at the Isuzu Monozukuri Service Training Center Maintenance engineering workshop (for all distributors) 51 courses and 281 sessions No. of participants: 2, sessions Safe and ecology driving practice in session

44 XX 000 本社みまもり倉庫 1 みまもり倉庫 1 みまもり倉庫 2 みまもり倉庫 2 休憩地点 A みまもりロジ1 みまもりロジ1 みまもりロジ1 休憩地点 B みまもりロジ2 本社 X XXXXXX みまもり太郎 Quality 35 Management Approaches 37 Initiatives for higher product quality Mimamori telematics for commercial vehicles (Available in some markets) We recommend the use of Mimamori, Isuzu s own advanced driving information system, as a way of monitoring customers driving status. Overview of MIMAMORI That was a close call! Remote management of multiple vehicles Daily driving reports 39 Screee Look out! 湘南 XXXX みまもり急行本社 45 Initiatives for higher operation quality Options You are driving too fast Driving support You are accelerating too suddenly How about a break? You are running the engine excessively Operation results map Monitoring of DPD malfunctions / detection of engine failure ECO driving report * When a large-scale disaster occurs, operation result data is submitted to specified NPO ITS Japan. 43

45 Quality 35 Management Approaches 37 Initiatives for higher 39 product quality 45 Initiatives for higher operation quality Announcement to Customers The Announcement to Customers section of the Isuzu website brings attention to accidents or failure risks from misuse or other reasons to warn customers who drive Isuzu vehicles. Notifications to Customers (2016) (Japanese only) Points of Inspection and Maintenance for Preventing Bus Fire Accident (Japanese only) Inspection of Resin Grips (Japanese only) Responses to longer-term service As a recent trend, we have seen longer terms of vehicle services or more mileage, due to economic changes. There are many ways that inspection and maintenance can ensure safety for our customers over a long term of service. To prevent failures from occurring, Isuzu is fully prepared with parts to be regularly replaced in order to meet customer needs for periodic maintenance works. Our scheme will continuously tackle improvements in inspection and maintenance including the long-term service aspect based on the actual status. Customer Center (Japan) Isuzu has set up a Customer Center to provide a point of contact for various inquiries from our customers. Opinions and inquiries received from customers are sent to relevant internal and external departments, and are applied to efforts for improvement in product and service quality. For inquiries, visit the websites below. (Japanese only) Automobile Customer Satisfaction Based on our Corporate Vision of Supporting Transport, the Customer Center carefully responds to the diverse inquiries we receive from our customers. Since commercial vehicles are involved with a much greater range of work than passenger vehicles, the amount of trouble which can arise if Field Quality even one vehicle stops operating is immeasurable. Engineering Dept. We believe that it is essential to provide our support so that our customers vehicles can be put Customer Center Yoshida Kyouko back into operation as quickly as possible and with complete safety. I am always conscious of our Corporate Vision when performing my work. When I find myself facing troubles with response or when I am thinking about how to set priorities, I always ask myself, Is this really fulfilling our goal of supporting transport? I also take special care to listen to and understand the feelings of customers when they express dissatisfaction. Communication can be achieved smoothly if we are receptive in listening to the things customers wish to express, and if this stance can then in turn be conveyed back to customers. I truly feel satisfaction and motivation in my work when I am able to resolve a customer s problems or concerns by offering my own knowledge. Since I only have a standard driver s license myself, when matters arise regarding commercial vehicles which I am not familiar with or don t understand, I ask the people around me for help and I am trying to improve my own knowledge by studying every day. My upcoming goal is to attempt to obtain a heavy-duty vehicle license or a maintenance qualification, so that no matter what I am asked I will be able to reply confidently to customers in my own words based on my own knowledge and experience. According to J.D. Power, we were ranked No. 1 in a 2017 Japan heavy-duty truck customer satisfaction survey, and No. 2 in a Japan light-duty truck customer satisfaction survey. We will continue to make every effort to provide products and services able to fully satisfy our customers. 44

46 Quality Basic Ideas Isuzu leverages efforts to raise awareness about quality and knowledge since we believe that in addition to enhancing product and service quality, enhancing the performance quality of individual employees helps build up the quality that meets customer needs. Quality awareness education for Isuzu distributors To build up their quality awareness as part of the Isuzu Group, all Japanese dealers undergo awareness education programs where they learn the importance of quality-related operations including accurate and prompt information sharing, the reliable collection of defective parts, and the early implementation of recall campaigns. 35 Management Approaches 37 Initiatives for higher product quality Education for raising awareness and knowledge among employees FY2016 achievements Quality awareness education for distributors 28 sessions 39 Initiatives for higher service quality Isuzu provides employee education in both awareness and knowledge with the aim of improving operational quality. Improving knowledge (Knowledge enhancing program) 45 Raising awareness Discussions among employees To raise awareness of operational quality, Isuzu holds a series of discus- Isuzu provides an education program for employees based on quality-related knowledge, including training on laws and regulations and on QC. The laws and regulations training includes programs on recall systems and Road Transport Vehicle Law while the QC training includes an entry-level QC sions among employees about doing a good job for our customers on the course, a basic problem solving course and a problem solving practice themes of telephone inquiries from customers to the Isuzu Customer course for quality improvement. Center, and the Quality Month Message given by top management to employees every November, which is Quality Month*. FY2016 achievements * Quality Month The Union of Japanese Scientists and Engineers, the Japanese Standards Association, and the Japan Chamber of Commerce and Industry have designated every November as Quality Month for the promotion of quality improvement activities. FY2016 achievements Theme of Quality Month message Let s stay alert and informed about real situations, so we can do even better work as a team! The Road Transport Vehicle Law / Recall scheme QC entry-level course Basic problem solving course (QC Training I) Practical problem solving course for quality improvement (QC Training II) Session held. (for the new employyes) 215 participants 155 participants 36 participants Stationing young engineers at distributors Young engineers also have the opportunity to work in distributor or in the front lines of service so that they can design products from a customer-oriented mind set. FY2016 achievements Stationing young engineers at distributors 25 participants Scene of paper helicopter flight demonstration during QC entry-level course 45

47 Isuzu Technical High School Isuzu Technical High School provides the necessary basic knowledge for engineers and aims to develop future leaders. Not only do students learn Quality 35 Management Approaches the required knowledge and skills for monozukuri (craftsmanship), but the school also guides them toward a deep understanding of monozukuri as well. They also enter the National Skills Competition in order to ascertain the results of their technical training. 37 Initiatives for higher product quality 39 Initiatives for higher service quality 45 Scene at hands-on turning training which was awarded a Fighting Spirit Prize Work produced during training exercises, which was awarded a Fighting Spirit Prize Scene at hands-on mechanical device assembly training which was awarded a Fighting Spirit Prize Work produced during training exercises, which was awarded a Fighting Spirit Prize FY2016 achievements The 54rd National Skills Competition Automobile Turning Category: 1 person received a Fighting Spirit Prize Automobile Mechanical Device Assembly: 1 person received a Fighting Spirit Prize 46

48 Basic Ideas Isuzu respects the personal character and individuality of each of its employees so that they can show their skills to the full, and aims to create Respect for Employees a safe, sound and comfortable work environment that gives them a sense of prosperity and achievement Industrial health and safety 51 Utilization of Diverse Human Resources 54 Personnel Development 57 Improving Employee Satisfaction 47

49 Respect for Employees 47 Management Approaches Utilization of Diverse Human Resources 54 Personnel Development 57 Improving Employee Satisfaction Isuzu is carrying out various measures to build a safe, secure working environment, and aims to create workplaces that fully comply with its safety basics: the Three Safety Principles, Isuzu s Five Safety Behaviors, and the Ten Prohibited Items. Policy Principles of Safety Three Safety Principles Order and neatness Inspections and maintenance Standard operations Ideas on safety Isuzuʼs Five Safety Behaviors Press the red button the moment you notice something wrong Work as a team by giving signals to each other Follow procedures carefully when setting up Pause and check before touching anything Start work with an inspection and finish work with maintenance Ten Prohibited Items 1. Do not touch working machinery and rotating objects. 2. Do not remove fitted covers, hoods, rails or safety devices. 3. Do not climb onto or step over conveyer belts, pits, or pallets. 4. Do not use gloves when operating a drill or rotary cutter. 5. Do not handle steel sheets or chips with bare hands. 6. Do not make decisions at work without consulting others. 7. Do not rush up and down stairs. Do not put your hands in your pockets. Do not run. 8. Do not smoke while walking. Only smoke in designated areas. 9. Do not walk underneath objects suspended from cranes. 10. Do not rush around corners or through doors. System Plant Health and Safety Management System (Organization) Plant Executive General Manager Manager / GL Personnel designated by Plant Executive Health and Safety Management Manager in Charge General Health and Safety Manager Deputy General Health and Safety Manager Specialized Health and Safety Managers Safety Managers Industrial Physicians Health Managers Sanitary Engineering Health Managers Meeting Structure Plant Health and Safety Committee Chair: General Health and Safety Manager Committee Members: Specialized Health and Safety Managers, Safety Managers, Industrial Physicians, Health Managers, Labor Association Branch Operations Department, Branch Health and Safety Committee Members Labor Association Branch Operations Department 48 LM TL Department Health and Safety Representative (Manager/GL/SE) Employees Monthly safety meetings, morning assemblies, etc. Meeting Structure Department Health and Safety Committee Chair : General Manager Committee Members: Department Health and Safety Representatives, Managers, LMs, TLs, etc.

50 FY2016 Initiatives for Occupational Health and Safety Activities In order to prevent employee occupational accidents, we are deploying Respect for Employees company-wide activities centered on pointing and calling and risk assessments after operation of new production equipment, to promote enhanced safety awareness and to improve production equipment safety. We are also Pointing and calling Risk assessments after operation promoting the creation of workplaces where our employees can work with- 47 Management Approaches out concern for their safety and health, by implementing risk assessments specialized for preventing fire accidents, and holding traffic accident pre- 48 vention training to raise individual awareness (risk prediction) as a part of traffic accident prevention activities. Main Themes Action Items Risk assessments to prevent fire accidents 51 Utilization of Diverse Human Resources 54 Personnel Development 57 Improving Employee Satisfaction Prevention of industrial accidents Prevention of fire accidents Increasing safety knowledge and awareness (Expanded practice of pointing and calling, etc.) Ensuring safety in operations (Reviewing procedure manuals, giving instruction in work safety, etc.) Making production facilities intrinsically safe (Risk assessments after equipment installation, etc.) Properly maintaining and controlling facilities and equipment that use hazardous materials (Introduction of risk assessments for preventing fires and explosion accidents) Understanding and eliminating causes of fire accidents Prevention of traffic accidents Preventing traffic accidents involving workers commuting by car or motorcycle Improving road safety awareness campaigns Health maintenance and promotion Arranging consultations with industrial physicians for workers doing excessive overtime Performing stress checks Improvement of work environment Continually performing environmental evaluations during safety assessments Promoting the creation of a comfortable working environment Disaster measures Reviewing systems intended to prepare for emergency situations such as earthquakes (Updating manuals, gradually updating disaster prevention equipment, etc.) 49

51 Initiatives for maintenance and promotion of good health Respect for Employees 47 Management Approaches Utilization of Diverse Human Resources Main Themes FY2012 FY2013 FY2014 FY2015 FY2016 Specific healthcare guidance Patients receiving health check-ups 4,710 4,837 5,574 5,251 5,595 Mental health counseling users hour telephone health counseling users Recreation and sports event participants Home visits & guidance for the elderly Health seminar participants Lifestyle-related disease prevention, promoting gargling & hand washing, walking challenge 2,134 2,101 1,980 1,973 1,866 program, etc. Breast cancer screening Gynecological examinations* 1 1,089 *1 In FY2016, we revised our businesses to offer total support for gynecological procedures as an optional part of health checkups. * Figures indicate no. of participants * Including Isuzu health insurance system details 54 Personnel Development 57 Improving Employee Satisfaction Future Initiatives Isuzu will tackles the challenge of creating work sites that allow the employees to fully comply with the safety basics: the Three Safety Principles, Isuzu s Five Safety Behaviors, and the Ten Prohibited Items. We also aim to reach our plant safety control targets through the steady continuation of activities such as safety patrols, close-call surveys, and hazard prediction. 50

52 Respect for Employees 47 Management Approaches 48 Industrial health and safety Basic Ideas Isuzu respects differences between people such as age, gender, nationality, level of disability, and work environment, and believes that utilizing such differences can increase employee motivation and improve the company s competitiveness through the creation of new ideas and value. Isuzu is therefore promoting a range of measures, including employing diverse human resources such as the disabled or foreigners, and creating an environment in which it is easier to do short-time work, take maternity or nursing care leave, and so on. Initiatives toward new employment Although the impact of the external environment and internal environment need to be considered, Isuzu s policy for recruitment is, where possible, to continue hiring a stable number of new graduates without being influenced by variations in business climate or results. We hope to maintain these recent low turnover figures by conducting recruitment activities that match Isuzu with job applicants, building an internal system of following up on recruits, and trying to keep them motivated through training etc Personnel Development 57 Improving Employee Satisfaction Trend in employee numbers (No. of people) 7,777 7,780 8, ,000 4,000 7,459 7,460 2,000 7,928 8, ,570 7,727 No. of new graduates recruited FY2012 FY2013 FY2014 FY2015 FY2016 Admin/technical worker (graduates of universities/ technical colleges) Admin/technical worker (high school/college) Skilled worker (graduates of high schools/junior high schools/trade schools) Total (no. of people) (years) Male Female No. of foreigners employed No. of people according to age (years) Less than and over Total Male 1,601 1,798 2,019 2,309 7,727 Female Total (no. of people) 1,718 1,881 2,153 2,359 8,111 Joined April Joined April Personnel turnover (including mandatory retirement) FY2014 FY2015 FY2016 Personnel turnover 3.4% 2.9% 2.9% * As of end of March 51

53 Promoting the role of women Promoting the role of old people (post-retirement) Isuzu fully understands that women will play a more important role in Japan Isuzu has established a retiree rehiring system and created a work environ- Respect for Employees for the country to achieve sustainable economic growth going forward. At present, Isuzu has about 400 female employees, of whom approximately 8% are at management or executive level, and will actively develop and promote more in future. ment in which employees can continue playing a role after 60 years old. Currently, 500 and more people are employed as rehired retirees. Trend in rehired retiree numbers 47 Management Approaches 48 Industrial health and safety Action plan to promote the role of women Based on the April 2016 Act on Promotion of Women s Participation and Advancement in the Workplace, Isuzu has drawn up the following action plan. FY2012 FY2013 FY2014 FY2015 FY2016 No. of people Make the number of female managers (and executives) in FY times what it was in FY Make the proportion of female administrative employees 40% and technical employees 7% by FY Encouraging employment of disabled people We are promoting the employment of disabled persons with a view to achieving a society where people support each other, regardless of disabilities. To constantly exceed the legal minimum employment rate of disabled 54 Personnel Development 57 Improving Employee Satisfaction When it was decided that I would be promoted to my current managerial position as Section Manager in FY2016, I was overjoyed that my work had been so highly evaluated, but at the same time uneasy about whether I was suited to managerial duties. Now, I can International Sales Dept. No.4 Europe & Oceania Group confidently say that I am happy to have Group Leader taken this step forward with an attitude of (section manager position) taking on new challenges. Even though the Ishida Noriko time I have is always limited, I am now balancing the tasks of raising my children with my new work duties, thanks to the kind support I can receive from the people around me. I believe that from here on, systems and measures related to various types of work styles, such as employment formats to support working mothers, will continue to advance and grow. I hope to be able to undertake further challenges in the future while maintaining my work-life balance. people, we actively recruit them not only after graduation but also mid-career. Isuzu also places disabled people not only in administrative positions but in technical workplaces too, taking into account each person s disability and based on what suits their aptitude and wishes, so that they can play an active role. Trend in employment rate of disabled persons (%) Legal minimum employment rate 0.50 Isuzu employment rate Private company average (FY) 52

54 Promoting work-life balance Developing a sustainable society or company requires a work-life balance Respect for Employees 47 Management Approaches 48 Industrial health and safety 51 that enables everyone, regardless of gender, to work with a sense of satisfaction and fulfillment while having time for things like bringing up their children and nursing their relatives. Isuzu therefore encourages less working out of hours and more taking of annual paid leave. It has also set up a system of different kinds of leave including parental leave, nursing care leave, and volunteer leave, as well as a short-time work system. Trend in parental leave utilization FY2012 FY2013 FY2014 FY2015 FY2016 Male Female Total (no. of people) Personnel Development 57 Improving Employee Satisfaction 53

55 Basic Ideas Respect for Employees 47 Management Approaches 48 Industrial health and safety 51 Utilization of Diverse Human Resources 54 Personnel evelopment Isuzu puts on-the-job practical training at the heart of its personnel development. Off-the-job training consists of courses away from the workplace, and is somewhere for employees to pick up skills their company needs and identify the direction in which they themselves should grow. This is because, amid all the changes and competition of globalization, every employee is required to think and act for themselves. Isuzu has therefore examined and clarified the skills needed at each level, and built a substantial training system for employees to acquire the right skills at the right time. Conditions of personnel development OJT Somewhere to develop Learn & develop through work Try out learned skills & knowledge 57 Improving Employee Satisfaction Off-JT Ability to develop Provides opportunities Somewhere to become aware Support Personal development Desire to grow by oneself Conquer weaknesses Bring out strengths Courses (Off-JT) create opportunities, skills are acquired on-site (OJT) 54

56 Education/training scheme Isuzu s training system is made up of three areas: career development, skills Respect for Employees 47 Management Approaches 48 Industrial health and safety 51 Utilization of Diverse Human Resources development, and management capability development. Career development is aimed at new employees and young employees, and cultivates personnel who can expand their own expertise and develop their career by themselves. Skills development helps employees to improve their skills and acquire the knowledge and insight to play a more global role, with a focus on the abilities required at their particular level and position. Management capability development is training aimed at enhancing managerial ability and humanity in order to cultivate the managers of the future. Isuzu training system (Admin & technical positions, executives) 54 Career development Skill development Management skill development Executives Global Communications Mid-level employees GS4 follow-up New GS4 QCⅡ Young employees GS2 follow-up Newcomers The newly employed OJMP2 follow-up Advanced-level personnel New MP2 New section manager / group leader 57 Improving Employee Satisfaction MP1 follow-up New MP1 GX2 follow-up MP1 assessments New GX2 GX1 follow-up Language New GX1 TSelf-development courses (SD courses) GS3 follow-up New GS3 *Bold borders indicate selection-based or optional training Trend in training participation and results by category and gender *As of end of March each year *No. of participants/no. enrolled Employee category Gender FY2012 FY2013 FY2014 FY2015 FY2016 Admin & technical positions / Male 688/3, /3,083 1,139/3,091 1,678/3,154 2,087/3,936 Executives (no. of people) Female 50/ / / / / 353 Skilled workers Male 201/4, /4, /4, /4,216 2,059/4,417 (no. of people) Female 5/ 34 0/ 31 1/ 31 4/ 29 20/ 34 55

57 Skills transmission and development Future Initiatives Respect for Employees 47 Management Approaches 48 Industrial health and safety 51 Utilization of Diverse Human Resources Improving Employee Satisfaction Isuzu is working to enhance skill levels, having established a graded training system for its skilled workers on Skills transmission and development, which is a topic in its Mid-term Business Plan. Initiatives by division [Production Division] ❶ For special skills that are advanced and require long experience, each workplace carries out its own skills transmission training while the Production Division as a whole provides more systematic skills transmission training. * Graded training for skilled workers: New employee, young, mid-career, supervisor, etc. ❷ Isuzu workers enter the annual National Skills Competition in their aim to acquire the highest skills in Japan, and have won prizes in successive years Bronze medal: Mechanical Device Assembly (1 person) Fighting Spirit Prize: Turning (1 person) 2013 Fighting Spirit Prize: Mechanical Device Assembly (1 person) Automobile Plating (1 person) 2014 Bronze medal: Mechanical Device Assembly (1 person) Fighting Spirit Prize: Automobile Plating (2 people) 2015 Bronze medal: Automobile Plating (1 person) 2016 Fighting Spirit Prize: Turning (1 person), Mechanical Device Assembly (1 person) ❸ We provide advanced skills training and leader training in collaboration with external training institutions. The number of workers who have passed the National Trade Skill Testing & Certification has doubled since Training departments (including Isuzu Technical High School) have joined together with workplaces to run study sessions and practice sessions that support further qualification acquisition. [Engineering Division] ❶ Every year we formulate career plans with career goals shared by senior and junior workers, and implement various curriculums for them to learn skills according to their level through training courses and OJT. ❷ Isuzu conducts advanced skills training not only at the Isuzu Monozukuri Service Training Center but also in collaboration with external training institutions such as Polytechnic Centers. ❸ Isuzu is working to improve test-driving skill levels, having established its own accreditation system for test vehicle driving. In its commitment to Monozukuri work, one of the initiatives in its Midterm Business Plan, as well as operation support work, Isuzu is tackling personnel development not only in Japan but also overseas, the aim being to cultivate excellent personnel for the future and enhance the strength of the Isuzu Group as a whole. 56

58 Respect for Employees 47 Management Approaches 48 Industrial health and safety 51 Utilization of Diverse Human Resources 54 Personnel Development 57 Basic Ideas Isuzu works intensely to improve employee satisfaction (ES) because we consider it to be a management challenge in terms of CSR and human resource development. The ES survey is conducted periodically (every other year) to monitor changes in satisfaction levels of Isuzu employees by analyzing fixed point observations. It has been conducted eight times to date. Isuzu utilizes the results of these surveys as valuable data for formulating various corporate measures, and will promote reforms toward further ES improvement in future. Welfare events held 2016 Plant Executive Cup Bowling Competitions at Isuzu Fujisawa/Tochigi Plants Plant Executive Cup Bowling Competitions were held at the Fujisawa Plant (Fujisawa-city, Kanagawa) and Tochigi Plant (Tochigi-city, Tochigi). Preliminary matches were held beforehand from September, with a total of 3,150 participants in Fujisawa and Tochigi testing their skill in order to reach the finals. The finals took place on November 26 (Fujisawa district) and November 27 (Tochigi district), and included teams not only from Isuzu but also from affiliated companies, as well as technical interns from overseas. Many colleagues and family members also came to show their enthusiastic support. The annual customary Pedometer Dance The venue was filled with excitement as participants attended in a wide variety of costumes, from current popular trends to luxuriant attire. Corporate Pension System The Pony Race, worth double points Since it was the final event, cheers of support became even more enthusiastic At Isuzu, the Isuzu Motors Corporate Pension Fund, a defined-benefit type corporate pension system, is in effect. This system provides coverage according to a reserve fund by the company for the purpose of supplementing public pension plans, with no contribution burdens placed on employees. A defined-contribution type pension system is also in operation, arranging systems for employees to live rich, fulfilling lives after retirement. Participants became even more excited with support from affiliated departments and family members Cheers of encouragement were heard with every throw 57 The 2016 ISUZU Spo-Rec (Sports and Recreation) in Omori (Headquarters) The 2016 ISUZU Spo-Rec in Omori was held at the company s Omori headquarters on October 21, Selected members from each floor of the headquarters building in this district participated in various games. Many employees had an enjoyable time getting a glimpse of a different side to their colleagues.

59 Initiative Policy Harmony with Local Communities Initiatives in Japan 64 Initiatives in Foreign Countries We in the Isuzu Group want to be trusted by our neighbors as a member of their communities, and to contribute to the development of those communities. We lead our operations across the world and show our respect for cultures and customs of nations and regions through our business activities. As a good corporate citizen, we play our roles on a global basis as well. Future Initiatives We greatly respect the initiatives implemented by Isuzu Group companies around the world, and are promoting activities to answer the needs of regional societies. We also aim to achieve harmony with local communities through support activities which consider the Sustainable Development Goals (SDGs) agreed upon by the 2015 United Nations General Assembly. 58

60 Harmony with Local Communities 58 Management Approaches Initiatives in Foreign Countries Isuzu s Activities Isuzu Monozukuri Hands-on Workshop (Design Class) Held in Tsujido Kaihin Park, Kanagawa Prefecture On March 12, Isuzu held the Isuzu Monozukuri Hands-on Workshop (Design Class) at Tsujido Kaihin Park in Fujisawa, Kanagawa Prefecture. For the first time, the workshop was held on a same-day registration basis, and all five classes were filled up. As a result, 100 children and parents took part and enjoyed putting their own various designs on paper craft Elf trucks and driving Isuzu s design center staff (in aprons) with the their great works on a test course. children holding their own uniquely designed Elfs Isuzu Monozukuri Hands-on Workshop (Design Class) Held in Shonandai, Fujisawa, Kanagawa Prefecture On February 26, Isuzu held an Isuzu Monozukuri Hands-on Workshop (Design Class) at Shonandai Culture Center Children s Museum in Fujisawa, Kanagawa Prefecture. On the day, 34 children and parents took part and enjoyed making their own colorful designs on the latest new Elf paper crafts and driving their great works on a test course Commemorative photo of everyone holding their finished trucks Isuzu Monozukuri Hands-on Workshop (Casting Class) held in Fujisawa, Kanagawa On June 11, Isuzu held a Monozukuri Hands-on Workshop (Casting Class) in Tsujido Kaihin Park in Fujisawa, Kanagawa. The 56 children and their guardians who attended the greatly oversubscribed event all gained experience of metal casting. Although the workshop has been implemented since 2014 in the earthquake-stricken areas of Tohoku, where it has received favorable reviews, in order to let children in the disaster areas share the value and enjoyment of manufacturing, this was the first time that it had been held in Fujisawa, Kanagawa, the home of Isuzu Fujisawa Plant. With some children and parents visiting the park and joining the class on the spur of the moment, classes were successfully completed two times, once in the morning and once in the afternoon. The participants were able to get a real sense of casting by creating the Isuzu characters Giga-kun, Elf-kun and Elga-chan out of metal. Photo of children when they start to feel affection for their works. Children working hard on their unique designs 59

61 Harmony with Local Communities 58 Management Approaches Initiatives in Foreign Countries Cosponsored Kanagawa Phil. Orchestra Factory* at Elementary Schools nearby Fujisawa Plant Isuzu sponsored the Kanagawa Philharmonic Orchestra s Orchestra Factory sessions at two municipal schools located in Fujisawa City, Kanagawa Prefecture: Mutsuai Elementary School (on January 17th) and Chogo Elementary School (on February 9th.) These sessions, which have been held now for three years running, offer the opportunity for children at elementary schools near the Fujisawa Plant to learn through first-hand musical experiences, with the goal of inspiring creativity and broadening perspectives. This year, the sessions were able to reach a total of around 2,100 children from the two schools. * Orchestra Factory:By listening to and participating in a live orchestra performance, children are able to experience for themselves a large group of people coming together as one to create something wonderful in this case, music. The idea is to have them see this as similar to the creation process at a factory. Fujisawa Plant An exciting summer festival was held at the Fujisawa Plant, including extravagant events such as displays of DeuSEL buses, and concluding with a thrilling fireworks show. People from the neighborhood showed strong interest The concert reaches its peak Furthermore, a special sales booth was set up at the festival to sell local products from Tohoku and Kumamoto in order to support disaster-affected areas. The children were able to experience a powerful orchestra performance first-hand, and perform along with the orchestra using instruments they are familiar with. (Left: Mutsuai Elementary School, Right: Chogo Elementary School) In addition, the children sang the school song, and an original composition written by them and the teachers, backed by the orchestra. Hopefully, this will have been an experience that they treasure for years to come. Supporting for Tohoku booth (left) and Kumamoto booth (right) Many participants had the interest and made cooperation of support. Isuzu Summer Festivals 2016 Both Fujisawa Plant and Tochigi Plant held their summer festivals in August The festivals were intended to show appreciation to the employees and their family members for their daily efforts as well as to the local community and residents for their cooperation. Fujisawa Plant welcomed approximately 23,000 visitors and Tochigi Plant approximately 7,000. The local residents also enjoyed the festivals. The venue heated up with participants in matching happi coats 60

62 Tochigi Plant The theme of the Summer Festival at the Tochigi Plant was Love Your Community, Love Your Family - Thanking Our Community, Families and Harmony with Local Communities 58 Management Approaches Initiatives in Foreign Countries Employees with One Heart. A variety of fun events were put on as a way of saying thank you to members of the local community, our employees, and family members. Visitors enjoyed many different events such as a Taiko drum performance staged by Kobugikai (left), and a cheerleading show presented by the Kokugakuin University Tochigi High School Cheer Squad (right). Isuzu employees from various workplaces also enjoyed the festival with family members. Exhibited at 2016 Fujisawa Industry Festival The 2016 Fujisawa Industry Festival (sponsored by the Fujisawa Chamber of Commerce & Industry and supported by the City of Fujisawa), an event introducing many of Fujisawa s commercial and industrial products and other special products to those in and outside the city, was held in Fujisawa City on May 28 and 29. Isuzu introduced itself and the environmental initiatives of its Fujisawa Plant, and also exhibited its Elf truck. About 75,000 visitors enjoyed the two days of the festival. Many of them, including parents with their children, came to the Isuzu booth. Elf truck on display outdoors The opportunity to sit in the driver s seat of a seldom-seen Elf truck caused great excitement among the children Isuzu Tochigi Plant grounds provided for Emergency Fire Response Team, Kanto Block joint training Following a request from the Ministry of Internal Affairs and Communications for help with billeting training space for its Emergency Fire Response Team* 1 Kanto Block joint training, Isuzu made the Tochigi Plant grounds available for the training on October 17 and 18. About 360 firefighters and 65 fire trucks from Saitama, Ibaraki and Yamanashi Prefectures gathered at the Tochigi Plant for those two days, carrying out mainly billeting training using air tents, along with support activity base training using its base facility truck* 2, and fire truck refueling training. *1 Emergency Fire Response Teams Firefighting teams set up in 1995 to carry out efficient rescue activities based on lessons learned in the Great Hanshin Earthquake. Emergency Fire Response Teams were passed into law by the 2003 revision to the Fire Defense Organization Act, and to date have been dispatched on firefighting duties to disasters such as the 2011 Great East Japan Earthquake, the 2015 Kanto-Tohoku Heavy Rainfall Disaster, and the 2016 Kumamoto Earthquakes. *2 Base facility truck A truck that forms a base for supporting firefighting activities, loaded with equipment enabling the billeting of around 100 people. It carries logistics equipment to support firefighting activities for a long time under tough conditions, such as in earthquake disaster areas. The Base facility truck by which they gathered in Isuzu Tochigi plant Scene from billeting training 61

63 Harmony with Local Communities 58 Management Approaches Initiatives in Foreign Countries Isuzu Group (Domestic) Initiatives Isuzu Engine Manufacturing Hokkaido Corporation makes donation to Tomakomai City s Restroom Car for handicapped people scheme Isuzu Engine Manufacturing Hokkaido Corporation (based in Tomakomai City; from hereon referred to as Isuzu Engine Manufacturing Hokkaido ) has made a donation to the Restroom Car scheme introduced in Tomakomai City in Hokkaido as part of measures aimed at helping physically handicapped people. The scheme uses a vehicle based on Isuzu s Elf truck, and the donation will be used to improve equipment and so forth. The scheme has been introduced by the city in order to provide an environment where physically handicapped and elderly people can participate in events and local activities without having to worry about whether or not there will be a toilet available. The Restroom Car can be used while in a wheelchair, and what s more, as it features composting toilets that use sawdust to decompose waste, it is also gentle to the environment. The car is useful not only during events, but also at disaster shelter centers when there is a shortage of toilets. Company facilities lent to Hokkaido Prefectural Police Mobile Traffic Unit for training Every year, WAcom Hokkaido Co., Ltd. (Mukawa-cho, Yufutsu-gun, Hokkaido: hereinafter WAcom Hokkaido ) lends company facilities, such as test courses, to Hokkaido Prefectural Police Mobile Traffic Unit for driving training. This year, police car and police motorcycle training was carried out over three days from August 19 to 21. Training at the WAcom Hokkaido test course. On-site facilities provided for regional driver training and local city event (WAcom Hokkaido Co., Ltd.) On October 1, as part of the safe driving training classes organized by the Muroran Trucking Association, WAcom Hokkaido gave winter road safety driving classes using its low friction test roads. For the twenty association members taking part on the day, the low friction test course gave them a real taste of driving on snowy and icy road surfaces. The car made its debut at Tomakomai Skate Festival (held on February 4th and 5th), where it received a lot of interest. The interior of the Restroom Car introduced in Tomakomai City Actually experiencing slippery road surfaces on the low friction test course 62

64 Harmony with Local Communities 58 Management Approaches 59 Special Class as Part of We Love Trucks Project Held at Local Elementary Schools (Isuzu Engineering Co., Ltd.) Isuzu Engineering Co., Ltd. (Fujisawa, Kanagawa Prefecture, hereinafter referred to as Isuzu Engineering ), holds activities by its volunteer members aimed at local children and employees families to make them love trucks. As part of this initiative, on March 29 Isuzu Engneering held our first special class at the Endo Community Center, Fujisawa for 19 children of Akibadai Elementary School and Ishikawa Elementary School, both in Fujisawa, Kanagawa Prefecture. They all enjoyed the various attractions on the day, including making their own maps on the theme Do you know there s a big truck factory nearby?, learning about the relationship between the community and Isuzu, assembling and designing paper craft Elf trucks, and sitting in the driver s seat of a real Elf. 64 Initiatives in Foreign Countries They suppressed the homemade maps, Where is our school? Where is Isuzu Fujisawa plant? 63

65 Harmony with Local Communities 58 Management Approaches 59 Initiatives in Japan 64 Isuzu Group (Overseas) Initiatives Scholarships Presented to Children of Isuzu Car Drivers Every year, P.T. Isuzu Astra Motor Indonesia (IAMI) presents scholarships to support children of Isuzu car drivers as they enter school. Screening is carried out on the children of Isuzu car drivers and mechanics throughout Indonesia, 170 of whom received this scholarship in The presentation ceremony was held on August 17 at the Indonesia Motor Show arena. * This year there were about 400 applications (twice as many as the previous year), 170 of whom received the scholarship after a rigorous screening. The first 250 applicants were also presented with a gift set including a satchel and books. Forestation activity to Commemorate 20th Anniversary of Founding of Isuzu Philippines Corporation Isuzu Philippines Corporation (hereinafter referred to as IPC ), approaching the 20th anniversary of its founding, is proactively holding various CSR activities. One of these was a forestation activity carried out on February 4 in the Mount Makiling forest reserve (a national forest conservation area run by the University of the Philippines) where we have long carried out conservation activities. Many IPC employees including the president took part Conservation in the Mount Makiling forest reserve has been underway since 2010 and we have to date planted more than 300 trees of 13 different species over 13 hectares and installed a 1.3km long footpath to help with forest conservation. All smiles at the scholarship presentation ceremony with children from communities near Jakarta Blood Donation Drives Conducted in Commemoration of the 60th Anniversary of Astra International On February 20, 2017, P.T. Isuzu Astra Motor Indonesia (hereinafter referred to as IAMI ) conducted blood donation drives to commemorate the 60th anniversary of the founding of its partner P.T. Astra International Tbk (Indonesia). Many employees took part in the blood donation drives Isuzu Philippines Corporation Supervisor, Corporate Communications Section Yvonne Linchangco The Isuzu Philippines CSR Kickoff activity was an extremely meaningful event. While continuing to provide high-quality products, we are also indicating our strong sense of responsibility toward environmental matters to our society. As we approach the 20th anniversary of establishment, Isuzu will not only introduce even more environment-friendly vehicles and provide environmentrelated support, but will also reaffirm its vow to support local regions and communities, with plans to provide technical education and guidance by IPC employees in the future. 64

66 Basic Ideas Isuzu aims to be a highly transparent company, disclosing impartial corporate information in a timely and appropriate manner in order to earn the Information disclosure broad trust of society. Disclosure and communication of corporation information At Isuzu, we put out information on our website with the aim of providing information that concerns all our stakeholders and building communication with those stakeholders. Category Where on the Website Supervising Divisions Products Product Lineup (Isuzu Homepage) Isuzu Motors Sales Ltd. Distributors Network Distributors Network (Isuzu Homepage) Isuzu Motors Sales Ltd. Regulations / Environmental Measures / Fuel-Efficiency / Cost Reduction Trucks Station Isuzu Motors Sales Ltd. Useful Information Column for Drivers* About Isuzu Motors Limited Corporate Profile (Isuzu Homepage) Corporate Planning & Finance Division I.R. Information/Investor Relations (Isuzu Homepage) To our Investors Corporate Planning & Finance Division For Inquiries/Consultations* Isuzu Customer Center Quality Assurance Division CSR Activities CSR (Isuzu Homepage) Corporate Planning & Finance Division Recruitment Information* Recruitment Information Administration Division About Recalls Recall Information Quality Assurance Division About Trucks and Diesel Vehicles* Isuzu s Technology: Work Vehicles around the World Corporate Planning & Finance Division Commercials, etc.* Museum Corporate Planning & Finance Division Hakobu After-Sales Division Communication Facebook Corporate Planning & Finance Division Isuzu Plaza Corporate Planning & Finance Division Items marked with a * indicate information provided in Japanese. 65

67 Compliance Activity Reports Basic Ideas Isuzu puts forth the corporate vision Isuzu will always mean the best. A leader in transportation, commercial vehicles, and diesel engines, supporting our customers and respecting the environment. To have the Isuzu corporate value recognized by society and continuously accomplish our corporate vision, it is essential that each one of our directors and employees act according to Isuzu s compliance standards, that is, not only complying with laws and regulations but also keeping high ethical standards that live up to the trust society puts in us. Isuzu places the highest priority on implementing such compliance standards. Isuzu has developed the Basic Policy for Compliance as a summary of these standards which was put into effect from 2005, and intends to have all executive members and employees knowledgeable and informed of the policy. This policy is composed of seven fields, and if incidents occur which would violate it, top management personnel themselves will execute measures for problem resolution and cause investigation which involve recurrence prevention, release of quick and accurate information to society, and fulfillment of their responsibility to provide explanations. Initiative Policy 1 Winning trust from our customers We aim to win trust from our customers by providing products and services that are useful to society, and thus contributing to the creation of a prosperous society. 2 Promoting fair and sound activities Isuzu business is based on transactions under fair and free competition. We also maintain sound and normal relationships with the government and politicians and act decisively as a corporate citizen against anti-social forces and organizations. 3 Ensuring fair disclosure of corporate information We communicate not only with our shareholders but also our stakeholders in broader society, disclosing our corporate information promptly, appropriately and impartially. 4 Respect for Employees We create a safe and comfortable work environment respecting each employee s personality and character so that everyone can fully demonstrate their capabilities. 5 Contributing to environmental conservation We not only address environmental conservation through our business activities, but also actively engage in social and regional environmental conservation activities as a corporate citizen of the Earth. 6 Contributing to society We actively carry out social contribution activities as a good corporate citizen. 7 Ensuring harmony with international and regional communities We respect the cultures and customs of nations and regions and contribute to their development through our business activities. 66

68 Internal Helpline The Suggestion Box (Helpline) has been set up at an external law firm for Isuzu has created a system for implementing specific activities and estab- the purpose of collecting suggestions on internal compliance from employ- Compliance lished internal and external (helpline) routes for collecting suggestions regarding Isuzu compliance. Moreover, the Compliance Committee was launched as the President s ees, securing a route to understanding issues. In accordance with the Whistleblower Protection Act, people providing information are thoroughly protected with their personal names and other 66 advisory group to seek objective advice, audits, and evaluations about promoting compliance. Compliance Promotion System Outline information kept hidden, and steps are taken to ensure that they are not subject to any disadvantageous treatment within the company whatsoever. Information provided to the Suggestion Box (Helpline) is also reported to the Compliance Committee. 69 Activity Reports Board of Directors Meeting Management Meeting President Advice Reporting / Consultation Invitation Compliance Committee External Experts Internal Consultation Services Internal consultation services have also been set up separately from the Suggestion Box. These internal consultation services are available through three contact routes: workplace contacts (supervisors), division internal Legal & Intellectual Property Dept. Compliance Management Group Compliance Committee Secretariat contacts, and company-wide contacts (Compliance Promotion Group of the Legal & Intellectual Property Department). Similarly to the Helpline, strict consideration is taken so that using these routes will not lead to any form of disadvantageous treatment whatsoever. Compliance Promotion Committee Members Group Companies Helpline Isuzu Group Department Managers Isuzu introduced Group Company Management Rules with the purpose of managing the Isuzu Group companies through integrated standards so that Employees the management level can be improved and compliance risks can be prevented within the group. Compliance Committee Individual reporting and consultation services have been set up internally and externally at 48 of our domestic Group companies and are each The Compliance Committee is organized as an advisory body which invites respectively operated for the purpose of collecting information on issues external experts such as university professors and lawyers to become its related to compliance. members, to ensure fairness and integrity in order to promote compliance. By regularly holding compliance promotion meetings, with Group compa- It is composed of four invited external intellectuals, the President, and three nies separated by business category, and having Group companies work executive members, and assembles once every 3 months. toward common Group targets, we are increasing their compliance aware- This committee conducts discussions which cover topics such as the ness and promoting horizontal development such as discovered compliance directions and action plans of Isuzu s compliance activities. risks, responses etc., which has resulted in risk prevention. 67

69 Compliance Promotion System in Isuzu Group Isuzu Quality & Compliance Promotion Meetings are held monthly composed of members from each division s Compliance Promotion Committee. Compliance The agenda items and deliberation content of these meetings are deployed internally by each division, and information is also provided at Group company promotion meetings. 66 Outline of Compliance Promotion System in Isuzu Group Isuzu Quality & Compliance Promotion Meetings Internal promotion & dissemination 69 Activity Reports Operating Companies* Promotion Meetings Japanese Dealers Promotion Meetings Overseas Operating Companies Promotion Meetings Each company: Internal promotion & dissemination Each company: Internal promotion & dissemination Each company: Internal promotion & dissemination * Operating companies: Related companies in Japan except Japanese dealers Strengthening Compliance System at Isuzu Group Companies in Overseas To respond quickly to compliance cases of the group companies in overseas countries and to let the cases be shared among them, Isuzu is strengthening compliance system at the overseas group companies. The ASEAN region was selected to be first target area. Compliance system improvement has been promoted in cooperation with main companies in Thailand and Singapore. Since fiscal 2016, the current situation of compliance in each company has been confirmed, and in December 2016, a meeting was held to explain to the group companies in Thailand about how to proceed with the future compliance system improvement. 68

70 Compliance 66 Management Approaches 69 Initiative Policies and Results for FY2016 In fiscal 2016, the issues of thorough compliance with the Subcontracting Act, thorough compliance with the Special Measures Act Concerning the Passing-on of Consumption Tax, and the drunk driving eradication campaign were raised as integrated Group issues (within Japan only) and promoted as a Group. Although these initiatives are proceeding according to plans, domestic work style improvements and overseas system arrangement and enhancement are becoming new issues to be addressed. We intend to incorporate these issues into our upcoming activity plans and respond to them from here on. It is also notable that there were no significant cases of compliance violations or fines in FY2016. Compliance education Isuzu conducts level-oriented education on basic compliance and various laws and regulations through classroom lectures and e-learning, with the aim of fostering compliance awareness. Manager training and education programs on various laws and regulations are also provided to group companies, the aim being for all Isuzu Group employees to act with a common awareness of compliance. In fiscal 2016 a total of 7,300 employees from 22 companies within the Isuzu Group attended such lectures. Activities for the Isuzu Group s common issues To raise awareness of Isuzu Group compliance activities, we have set some common Group targets and are tackling compliance as a whole Group. In fiscal 2015 we addressed thorough compliance with the Subcontracting Act, thorough compliance with the Special Measures Act Concerning the Passing-on of Consumption Tax, and the drink driving eradication campaign. Scene at compliance training Implementation of compliance surveys (Japan) We regularly implement annual compliance surveys with the aim of confirming the spread of compliance awareness and uncovering compliance risks. In fiscal 2016 we surveyed a total of 11,760 people from 48 companies. Issues identified from the survey results will be set as issues to be addressed in this fiscal year by each company, and responded to through training sessions or other activities. Main education themes in FY2016 Basic compliance education for new employees Compliance education for managers Compliance education for mid-career recruits Education about authorized exporter declaration procedures Education about harassment Drunk driving eradication campaign DVD screening 69

71 Compliance 66 Management Approaches 69 Publication of Compliance Guidebook and Compliance Cards A company-wide Compliance Guidebook was published in January 2006 and has been deployed throughout the company, to serve as a means of indicating the fundamental stance and concepts of behavior required of all of Isuzu s executives and employees, and as a compiled code of conduct which should be understood and followed. We have also issued Compliance Cards noting particularly important items selected from the Compliance Guidebook, which can be carried at all times by employees and referred to as necessary. Division-oriented Compliance Guidebooks which incorporate specific practical examples to be followed by each division or department have been published and are deployed by individual divisions. Activities to Prevent Violation of the Antimonopoly Law Compliance Manual for Observing the Antimonopoly Law, first issued in January 2000, was revised and issued in December This revised edition contains the items that reflect the amendments to the law including the review of administrative monetary penalty system and introduction of review concerning business combination plan. The revised compliance manual also includes the case examples and explanations about the actions that can be a problem in connection with the business of the Isuzu group companies. Monitoring Initiatives At our monthly Quality and Compliance Promotion Meetings, selected issues are presented by individual divisions and their status is confirmed. The Corporate Audit Department and external consultants also conduct monitoring activities to check whether in-house and Group company self-inspections are suitably performed. Looking toward FY2017 (Objectives and Issues) In FY2017, we have set the goal of Activating our information network and thoroughly executing advance prevention measures as our domestic activity target (for Isuzu and domestic Group companies), and Arranging compliance systems as the target for our overseas Group companies. Respective issues will be promoted both domestically and overseas according to activity plans, and confirmed through promotion meetings. Overseas business guidelines Isuzu s business activities have spread to various countries around the world. So that we conduct our business activities with respect for the laws and regulations, business practices, and religious and cultural values of each country, we have created a set of overseas business guidelines for developing appropriate business abroad. 70

72 Risk Management Basic Ideas Isuzu has set up a system in accordance with our Risk Management Regulations by which each division s Risk Management Officer conducts the risk management of their division and a Chief Executive for Risk Management controls the company s overall risk. We conduct thorough risk management by understanding and assessing the status of risk management at the Management Meeting and, in the event of a crisis, discussing, determining and implementing a response (including systematic) at the Management Meeting and reporting to the Board of Directors where appropriate. Management system Board of Directors Meeting Management Meeting Administration Division Executive BCP basic policy Basic policy on business continuity (1) We will secure the safety of our executives, employees and their families. (2) We will strive to make facilities, machinery etc. safe and prevent a secondary disaster. (3) We will minimize the impact on our customers and business partners. (4) We will try to restore and continue operations at an early time. Risks invoking BCP The designated targets of Isuzu s BCP are key risks that could potentially lead to the long-term suspension or shutdown of operations. BCP Promotion System at normal times Management Meeting Promotion Committee Chair (Administration Division, Division Executive) Manufacturing Division Executive Engineering Division Executive Purchasing Division Executive After Sales Division Executive Powertrain Business Division Executive Sales Division Executive Business Process Development Division Executive Administration Division Executive Corporate Planning & Finance Division Executive Quality Assurance Division Executive Dept. A Manager Person in charge Deputy (Administration Division, Acting Division Executive) Division committee members Secretariat (General Affairs & HR Dept.) Division committee members Dept. B Dept. C Manager Person in charge Manager Person in charge Manager Person in charge About Training Activities BCP initiatives Purpose of BCP in Isuzu Isuzu fully recognizes its corporate duties (social responsibilities) and has therefore drawn up a business continuity plan (BCP) consisting of a basic company-wide plan and action plans for each department, for quickly restoring the supply of its products and services even in times of difficulty after a large-scale disaster, and has been executing, updating and managing this plan. Isuzu carries out training on a regular basis to ensure effectiveness. In addition to disaster response training at each of our bases, initial response training is also held for establishing a Response Headquarters immediately after a large-scale disaster and carrying out measures such as collecting information on the safety of employees and damage conditions at each base. 71

73 Corporate Governance Basic Ideas Isuzu believes that the establishment of corporate governance structures that provide a framework for discipline is indispensable to its ability to generate consistent profits and enhance corporate value through its business activities. Recognizing that the fundamental purpose of corporate governance is to respect the position of all its stakeholders and build smooth relations with them, Isuzu endeavors to ensure fairness and transparency in its corporate affairs through the timely and appropriate disclosure of important information. Corporate Governance System Isuzu adopts a corporate auditor system and has established a Board of Directors and an Audit Committee as internal bodies to oversee and audit important managerial decisions. To speed up managerial decision-making and business operations, Isuzu has set up a Management Meeting to examine and make decisions on critical management matters, in accordance with resolutions of the Board of Directors. The Management Meeting meets every other week as a rule and reports on the status of business operations at the monthly meeting of the Board of Directors. Isuzu has also created various committees that report to the Management Meeting in order to streamline discussion of issues in their specialized areas. We have also continued to use an executive officer system to provide proper support for our directors business operations. In addition to attending important meetings such as Board of Directors meetings, auditors solicit reports from directors and other leaders concerning the execution of their duties, review important decision-making documents and other materials, investigate operational and financial conditions at Omori headquarters and major worksites, request reports from subsidiaries as needed, and audit company operations. Corporate Governance System General Shareholders Meeting Appointment or dismissal Appointment or dismissal Appointment or dismissal Management/Overseeing Business Operations Directors (11, including 2 external directors) Board of Directors Meeting Dissemination of management & compliance decisions Auditing Discussion/ Reporting Attendance/Cooperation Attendance by audit & supervisory board member Understanding internal governance, business operations, etc., auditing divisional operations Audit & Supervisory Board Member / Audit Committee (5, including 3 external auditors) Dialogue Audit & Supervisory Board Member Support Group (Ensures independence from management) Discussion & reporting Coordination & cooperation among auditors Audit Cooperation Accounting Auditor Accounting audit Specialized discussions Quality Assurance & Customer Satisfaction Improvement Committee Global Environment Committee Export Control Committee Budget Special Committee Facility Investment Committee Product Program Committee Management Meeting Business Operations, Risk Management Executive directors Executive officers Divisions, Departments, Groups Employees President and Representative Director Legal & Intellectual Property Dept. Compliance Management Group Issue raised Group Companies Calls for improvements to business monitoring, internal governance system Advice Compliance Management & Promotion Audit result reported to Management Meeting Compliance Committee (External experts invited as committee members) Helpline Cooperation Cooperation Corporate Audit Department (under direct control of the President) Internal audits/ governance audits Internal audit 72 *As of 29th June 2016

74 Corporate Governance Board of Directors & Audit Committee The Board of Directors Meeting is made up of 11 directors (including two external directors). It holds monthly Board of Director meetings as well as extraordinary meetings as needed, at which it discusses and makes decisions on important business operations. To be appointed, directors require a deep knowledge and experience of management and an adequate understanding of Isuzu s business and the auto industry, based on which they also need to be able to make decisions and speak appropriately on the basis of sufficient knowledge and experience. As well as promoting such highly resourceful and able people from within the company, Isuzu also appoints a few from outside to the Board of Directors Meeting, in order to increase the diversity of its discussion and decision-making and enhance its overseeing function. To properly support the directors business operations, Isuzu also uses an executive officer system of reporting regularly to the Board of Directors Meeting on the status of operations. The Audit Committee is made of up 5 audit & supervisory board members (including 3 external members). Each audit & supervisory board member attends the Board of Directors Meeting and audits the of business operations of the directors in accordance with the audit plans set out by the Audit Committee. We have also set up standing Management Audit Meetings attended by all audit & supervisory board members including external members ahead of regular Board of Directors Meetings, which enhance the function of management audits. Management Meeting and Committees To speed up managerial decision-making and business operations, Isuzu has set up a Management Meeting to examine and make decisions on critical management matters, in accordance with resolutions of the Board of Directors Meeting. It has also created various committees that report to the Management Meeting in order to streamline discussion of issues in their specialized areas. Status of internal audits and corporate auditors audits Regarding internal audits, Isuzu strengthens its legal compliance, the reliability of its financial reporting, its operational effectiveness, and so on through the implementation and support for internal audits by the Corporate Audit Department. In addition to attending Board of Directors Meeting and other important meetings, Audit & Supervisory Board Members receive reports from directors and other leaders concerning the execution of their duties, review important decision-making documents and other materials, investigate operational and financial conditions at Omori headquarters and major worksites, request reports from subsidiaries as needed, and audit company operations. Board of Directors and Officers 73 Committee Name Chair Function/Role Quality Assurance & Customer Satisfaction Improvement Committee Quality Assurance Division Officers with jurisdiction Dealing with quality issues requiring notification according to regulations on decision-making related to the improvement of company-wide quality assurance and customer satisfaction (CS), etc. Global Environment Committee Related division executive officer Discussing matters concerning environmental conservation in Isuzu Group, etc. Export Control Committee Administration Division Acting Executive Inspecting exports of strategic goods and strategic technologies beforehand in order to eradicate legal violations related to their export Budget Special Committee CFO or officer in charge of Corporate Comprehensively deliberating on items related to company-wide budget Planning & Finance Division Facility Investment Committee Officer in charge of Corporate Deliberating on items related to company-wide capital investment Planning & Finance Division Product Program Committee Overall Chief Engineer Deliberating about individual product development proposals, target-setting and control, and promotion and evaluation

75 Corporate Governance We have appointed two external directors (non-standing) and three external corporate auditors (of whom one is full-time). There is no interest in Isuzu which should be disclosed in terms of organizational/human relations or transactions with these outside members. While some of the board members own shares of company stock, there is no interest in Isuzu which should be disclosed in terms of capital relations. External officers are therefore able to recognize the neutral and impartial role Isuzu should play in society and to oversee its management without showing any favor toward managers or particular stakeholders. Isuzu has no actual written standards or policy concerning the independence of external officers for selection, but it does ensure their independence by not considering for selection anyone who is a related party, or is at the time of selection the director or employee of a corporation that is a related party, or has been the director or employee of that corporation, or is a lawyer or certified public accountant belonging to a corporation with which Isuzu has a signed advisory contract or audit contract at the time of selection. External Directors/Auditors and reasons for selection Name Position Reason for appointment Kazuhiro Mori Hiroyuki Maekawa Tetsuhiko Shindo Takashi Mikumo Kanji Kawamura Director of the Board Director of the Board Standing Corporate Auditor Standing Corporate Auditor Standing Corporate Auditor External officers As the manager of a public-listed company, he has a wealth of experience and extensive insight. As the manager of a public-listed company, he has a wealth of experience and extensive insight. He has a high level of expertise and a wealth of experience in finance and corporate financial affairs, as well as considerable knowledge in financial affairs and accounting. He has a wealth of knowledge and experience in finance and corporate management. He has a wealth of knowledge and experience in corporate legal affairs. Remuneration for Directors and Audit & Supervisory Board Members The remuneration of Isuzu Directors is determined within the range approved by the shareholders meeting according to decisions made by Board of Directors Meeting, including remuneration levels of other companies and Isuzu s achievements. The amount of the remuneration for each Director reflects that individual s position and the performance of Isuzu and the individual concerned. Moreover, the remuneration of Audit & Supervisory Board Members is determined within the range approved by the shareholders meeting according to decisions made by auditors meetings, including remuneration levels of other companies and Isuzu s achievements. Exec category Remuneration ( 1 M) No. of execs Directors (except external) Audit & Supervisory Board Member (except external) 61 3 External Directors & Corporate Auditors 68 5 * As of the end of March 2017 * No. of execs covered The above remuneration amounts are for the current fiscal year and are not confined to positions held from the day after the closing of the most recent regular shareholders meeting. The numbers of executives covered therefore include those who had retired at the closing of regular shareholders meetings held during the current fiscal year. 74

76 Supply Chain Management Activity Reports Basic Ideas To fulfill our corporate social responsibility, win public confidence, and contribute to the development of a sustainable society, Isuzu addresses various issues in fields such as environment, quality, compliance, social contribution while recognizing the importance of gaining the cooperation and trust of all our stakeholders including business partners. Purchasing Basic Vision We would like to support smooth production by procurements. Toward this goal, we guarantee satisfactory quality, delivery time and quantities of purchased products and cooperate with the provision of new technologies through purchasing markets, contributing to the profits of our company. We believe that these will help establish interactive communication built on mutual trust with our business partners. (Established: July 1997, last revised: April 2008) Purchasing Basic Policy 1 With quality as our first priority, Isuzu aims to build a system of creating and delivering products that satisfy our customers. 2 Isuzu aims to procure parts based on fair and equitable competition, whether in Japan or overseas, so long as they are satisfactory in terms of quality, pricing and delivery. 3 Isuzu works to enhance our corporate competitiveness while developing procurement activities aimed at win-win relationships with our business partners. Purchasing Slogan OPEN(Optimum Procurement to Embody the Needs) Isuzu will match market needs and establish optimum procurement routes by encouraging procurement reforms. The procurement slogan depicts an image of the reform to be recognizable internally and externally (established July 2010). It is also displayed on materials distributed inside and outside of the company, as well as on business cards. *The name OPEN also indicates transparency of procurement. Thorough Enforcement of the Purchasing Basic Vision and Basic Policy among Purchasing Division Members The Purchasing Basic Vision and Basic Policy are indicated in the Purchasing Division Compliance Guidebook. This Guidebook is also available in the in-house database so that it can be viewed at any time by Purchasing Division members. Furthermore, explanations of the Purchasing Basic Vision and Basic Policy are included as part of introductory training when personnel are assigned to the Purchasing Division, for thorough understanding by all members. 75

77 Supply Chain Management Purchasing Promotion System The Purchasing Division holds both Quality and Compliance Promotion Meetings and Environmental Meetings once a month. Information from these 75 committees is passed onto all the departments within Purchasing Division. We have also established a Business Partner Consultation Service within our Legal & Intellectual Property Department s Compliance Management Group, providing impartial consultations for our business partners on compliance related matters. 77 Activity Reports Compliance promotion system Environmental management system Purchasing Division s quality & compliance promotion meeting (monthly) Division Executive Purchasing Division s environmental meeting (monthly) Division Executive Global Environment Committee Executive Executive Executive Compliance Committee Executive Executive Executive Green Procurement Working Group Dept. Manager Member Dept. Manager Member Dept. Manager Member Dept. Manager Member Dept. Manager Member Dept. Manager Member Dept. Manager Member Departmental quality & compliance promotion meetings (monthly) Purchasing Division Promotion Committee Member Dept. Manager Member Compliance Promotion Committee Business Partner Consultation Service, Compliance Management Group, Legal & Intellectual Property Dept. Consultation Business partners Dept. Manager Member Dept. Manager Member Dept. Manager Member Dept. Manager Member Dept. Manager Member Dept. Manager Member Dept. Manager Member Environment Committee Member Dept. Manager Member Departmental internal meetings Purchasing Division Promotion Committee Member Dept. Meeting members Departmental meetings Production Environment Committee Fujisawa Plant Environment Committee Fujisawa Plant Environmental Promotion Committee Environment related committees Business partners Request / Support Request / Support 76

78 Supply Chain Management 75 Management Approaches 77 Isuzu Supply Chain Isuzu chooses its suppliers according to a fair and equitable selection process regardless of whether in Japan or overseas. We are working to enhance our corporate competitiveness while developing procurement activities aimed at win-win relationships with our business partners. A total of 695 companies in Japan and abroad are business partners of Isuzu. About 90% of these partners are based in Japan. In terms of transaction amount, the procurement of parts makes up about 80% of the total. The delivery quality and market quality of our business partners are monitored, and if declines in quality are recognized, the applicable companies are selected to be companies subject to management or observation, and instructions on quality improvement are given. Business partners Isuzu Group Distributors Production of parts/ materials Manufacture of parts Assembly of engines etc. Assembly of vehicles Overseas production base Production subcontractors of buses, engines Production of consigned goods Option manufacturers Optional bed Industrial engine customers No. of partner companies Transaction amount (by country/region) Transaction amount (by item) Overseas 63 companies 9% Japan 632 companies 91% Asia 3.8% Europe 3.8% North America 0.9% Japan 91.5% Equipment/tools 5% Commissioned/ options 9% Others 1% Materials 3% Parts 82% 77

79 Supply Chain Management 75 Management Approaches Isuzu Supplier CSR Guidelines Isuzu has established the Isuzu Supplier CSR Guidelines, which summarize the requests we have for our business partners concerning our CSR activities, corporate vision, procurement basic vision, and so on. These guidelines were developed based on the Supplier CSR Guidelines issued by Japan Automobile Manufacturers Association, Inc. and the CSR Guidebook by Japan Auto Parts Industries Association. (Drawn up October 2014) Isuzu Supplier CSR Guidelines pdf/isuzu_csr_guideline.pdf Requests for our Business Partners Our business partners are expected to deploy activities in accordance with the Isuzu Supplier CSR Guidelines. Even new business partners are requested to carry out initiatives in accordance with these Guidelines when contracts are made. Surveys on environmental matters and risk management were implemented in fiscal Interviews on the status of initiatives were directly held with certain business partners and the conditions of production sites were confirmed. We will continue to implement similar activities in fiscal At our procurement policy briefing held in March 2017, explanations were provided on the Guidelines for Proper Transactions in the Automobile Industry revised in January 2017, and their thorough understanding and related activities have been requested of our business partners. Overview of Isuzu Supplier CSR Guidelines We aim to carry out procurement activities with full consideration for human rights and work environments. 1) Safety and Quality (1) Supply of products and services to meet consumer and customer needs (2) Supply of appropriate information related to products and services (3) Assurance of safety regarding products and services (4) Assurance of quality regarding products and services 2) Human Rights and Labor (1) Elimination of discrimination (2) Respect for human rights (3) Prohibition of child labor (4) Prohibition of forced or compulsory labor (5) Wages (6) Working hours (7) Conversations and discussions with employees (8) Safe and healthy working environments 3) Environment (1) Environmental management (2) Reduction of greenhouse gas emissions (3) Prevention of environmental pollution regarding air, water, earth, etc. (4) Resource conservation and waste reduction (5) Chemical substance management 4) Compliance (1) Legal compliance (2) Compliance with competition laws (3) Anti-corruption (4) Management and protection of confidential information (5) Export transaction control (6) Protection of intellectual properties 5) Information disclosure (1) Disclosure of information to stakeholders 6) Social contributions (1) Harmony with local communities

80 Green Procurement Guideline September, 2017 ISUZU MOTORS LIMITED 79

81 Supply Chain Management 75 Management Approaches 77 Communication with Business Partners Isuzu intends to strengthen communication with its business partners through briefing sessions and meetings. We also pay close attention to communicating respectfully with our business partners on a daily basis. In our briefing session on production in October 2016, we distributed our 2016 CSR Report (abridged version) to attending business partners, and requested their cooperation with Isuzu s initiatives. Establishment of Business Partner Consultation Service We have established a Business Partner Consultation Service within our Legal & Intellectual Property Department s Compliance Management Group, providing impartial consultations for our business partners. Contact information, reception times, and other details related to this service were provided once again at the procurement policy briefing held on March 24, Procurement policy briefing: once/year (March) Production briefing: 2 times/year (April, October) Quality policy briefing: once/year (April) Isuzu Kyowakai* (regular general meeting) once/year (May) Isuzu Kyowakai (joint committee meeting) once/year (July) Isuzu Kyowakai (managers social gathering) once/year (October) Isuzu Kyowakai (1st to 6th subcommittees) 4 times/year (for each subcommittee) *Isuzu Kyowakai: A cooperative association composed of Isuzu s business partners. Future Initiatives Surveys on the status of initiative execution by our business partners revealed that there are large differences in execution status depending on the business partner. In order to improve the overall execution level, we will hold interviews on execution status and check the conditions of production sites, while also continuing to gain an understanding of the level of execution through surveys, and we will apply these results to future activities. By introducing examples of improvements achieved from these interviews and surveys, we will promote the activities of our business partners. We will review the content of the Isuzu Green Procurement Guidelines and Isuzu Supplier CSR Guidelines as necessary while also continuing activities to raise awareness of these guidelines. Procurement policy briefing Production briefing Quality policy briefing Isuzu Kyowakai (regular general meeting) 80 Isuzu Kyowakai (joint committee meeting) Isuzu Kyowakai (managers social gathering)

82 A Thirdparty Opinion Professor, Takasaki Ctiy University of Economics Takeshi Mizuguchi I extend our highest respect for the Isuzu company s regional contribution activities both inside and outside of Japan, such as visiting lectures made to elementary schools, and ongoing support provided to disaster areas. This year, you also replied for the first time to requests from the CDP for disclosure of information related to climate changes. Isuzu implemented in-house investigations of its diesel engine data, and your President has declared in his introductory message that the company has been confirmed to have no involvement in unjust practices. All of these examples can be considered representations of the honest and sincere stance of your company. I also believe that initiatives such as holding maintenance engineering competitions in various countries and regions through technical skill contests, and steps to address the development of the next generation by supporting education at maintenance training schools, could only be carried out by Isuzu with your global deployment of production and development bases. Your measures for the full model change of Giga heavy-duty trucks as introduced in the beginning of the report deserve high praise as well. Improving environmental performance and pursuing safety can be considered core elements of CSR, as both can be seen to have the goal of resolving social issues through primary business of your company. Let us now examine the overall status of your company s production lines. The Paris Agreement, also referred to by your President, indicates the substantial goal of achieving zero CO2 emissions as early as possible in the latter half of this century. From a third-party standpoint, however, I have some doubts regarding whether this goal can actually be accomplished by improving fuel efficiency within the scope of existing diesel engine technology. France and the United Kingdom have announced policies to ban gasoline vehicles and diesel vehicles by the year In your company s business activities, the largest sources of impact on global warming are believed to be CO2 emissions over the life cycle of vehicles that have been sold. Although this report indicates that initiatives for fuel efficiency improvement have been carried out and that the target fuel efficiency levels have been achieved for all vehicle models, I was somewhat concerned that there was no specific information related to fuel efficiency contained in the data on environmental activity results. I understand that in the field of heavy-duty trucks, EVs (electric vehicles) may not be a realistic solution since the load weight will become a significant issue not found with passenger vehicles. Therefore, I believe that this point should be clearly communicated. In addition, I believe this means there will be an even greater need to indicate your company s vision on how you intend to balance the requirements of transportation with the demand for zero CO2 emissions. Are there expectations for revolutionary improvements in battery performance, or will you propose a transportation system integrated with infrastructure arrangements for supplying electric power? Or, are still other methods to address these matters conceivable? In any case, I believe that it will be necessary not to simply summarize the activities implemented at worksites into reports, but to carry out initiatives embodying the strong intentions of management personnel toward resolving issues. I look forward to these points being incorporated into your identification of materiality. This is because I believe that identifying materiality consists of describing its related vision as a company, proposing strategies, and applying management resources as necessary. Of course, global warming is not the only issue at hand. I would like you to have a broad viewpoint and carefully consider what issues are truly important to your company. 81 Response to the third-party opinion CSR & Eco Planning Group, Corporate Communications Dept. Isuzu Motors Limited We would like to express our sincere appreciation to Professor Mizuguchi for continuing from last year to present his valuable opinions on the Isuzu Group s CSR activities. This year, we were commended for our regional contribution activities carried out in areas we have expanded into as a company involved in global deployment, as well as our initiatives toward resolving social issues through products with improved environmental and safety performance. These activities were evaluated as measures to resolve social issues by fulfilling our goal of providing Isuzu unique solutions, and we will continue to promote such projects in the future. We also received comments regarding the Paris Agreement and policies in various foreign countries to ban the sale of vehicles with internal combustion engines, and particularly on the importance of responding to the problem of global warming. Although the situations that exist for passenger vehicles and commercial vehicles differ, we are aware that these are important social issues whose consideration is part of our duties as a manufacturer of commercial vehicles which support logistics. Not limited only to diesel vehicles, Isuzu is engaged in developing environment-conscious technology such as EVs and natural gas vehicles, and is also proceeding to develop technology for next-generation logistics such as automatic driving, most notably applied to convoy travel conditions. The release of our mid- to long-term vision for these areas is still under internal discussion, but we will continue to investigate the methods to be used for disclosing such information. Additionally, we believe that the identification of materiality* 1, which has been pointed out as a key point for our upcoming activities, will require company-wide deliberation. We realize that considerable time is being taken for this identification, but since it is such a critically important issue we will continue to hold careful in-house discussions focusing on it. Professor Mizuguchi has once again provided us with a wide variety of valuable opinions this year. We will diligently take these views into consideration and make ongoing efforts to resolve social issues so that we can live up to the relationships of trust we have with our stakeholders. *1 Materiality refers to items identified through dialogs with stakeholders as high-priority issues that should be addressed by CSR.